The post-election President Trump trade is officially over. Instead of stimulating the economy and fostering growth, the new Administration wants trade concessions through tariffs.
Markets also put plenty of hope on Tesla (TSLA). The stock soared in hopes that the electric vehicle firm would thrive under lower regulations. However, CEO Elon Musk’s involvement with DOGE is hurting the vehicle’s brand value.
The trade war chapter will hurt companies that rely on parts and services that cross U.S. borders. Airlines and banks are economically sensitive, too. Stock markets are now pricing in the risk of an economic slowdown unfolding by the second half of this year.
On Tuesday, Trump imposed a 25% tariff on imports from Canada and Mexico. Goods imported from China now face a 20% rate, up from 10% previously. As expected, Canada responded with counter-tariffs. China reacted by adding another 10% to 15% tariffs on various UI.S. imports, starting March 10.
Mexico will hit the U.S. back with tariffs. It will finalize them by this weekend.
Investors should exercise caution on holding aerospace supplier stocks. Boeing (BA), Textron (TXT), and General Dynamics (GD) produce engines in Canada.
In 2023, steel imports totaled nearly 25% of U.S. steel consumption. Expect Nucor (NUE), Alcoa (AA), U.S. Steel (X), and Cleveland-Cliffs to underperform in the months ahead.
