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U.S. President Donald Trump this weekend announced hefty tariffs on his country’s three biggest trading partners, leaving investors scrambling to position themselves for a global trade war. Canada and Mexico face 25% duties on their exports to the U.S., with a lower 10% levy imposed on Chinese goods. Canada has already responded with retaliatory tariffs of 25% against $155 billion of U.S. goods. Trump has, meanwhile, stated that the European Union will be next in the firing line, with the U.K. also under consideration. Though Trump repeatedly threatened tariffs on the campaign trail, Deutsche Bank analyst Jim Reid said in a Monday note that the market had been “completely under-pricing the risks” and would now be in “severe shock.” Among the expected short- to medium-term impacts are a slowdown in global economic growth, particularly in countries with large manufacturing sectors, a spike in oil prices, higher prices for U.S. consumers and higher-for-longer U.S. interest rates, with a stronger U.S. dollar as a result. Trump tariffs could create a new challenge for Chinese policymakers: A growth rate below 5% Outside of the U.S. and the three other economies directly involved, sectors around the world are braced for impact from the tariffs. Here are some of the areas expected to be hit: Automotives Autos firms — from car brands to the makers of vehicle parts — are expected to be among the worst affected by escalating trade tensions as they represent a major area of international imports into the U.S. Germany’s Volkswagen, for example, owns Mexico’s biggest car factory where it produces vehicles for export to the U.S. Analysis by RBC Capital Markets estimates the company could see a 9% cut to its earnings as a result of tariffs in a worst-case scenario, while Stellantis — which owns Chrysler and Jeep —…

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Filed under: News - @ February 3, 2025 1:20 pm