We have all heard by now that tariffs are coming more than once or twice. Donald Trump has maintained that he wants to install more tariffs during his campaign and after the election. Now we have seen the formation of what they may look like. Trump’s tariffs are being signaled as 25% on goods coming from Mexico and Canada and an additional 10% on U.S.-bound goods coming from China on top of what they already pay.
Some companies have been able to avoid an impact from tariffs, but others may not be able to avoid or abate the impact of these tariffs. It is important to keep in mind that by the time these go into effect there are likely many carve-outs. After all, the lobbyists and industry titans have not all plead their cases yet.
Oggonomics is tracking how each major company is reacting to the news. First and foremost, in the realm of direct nation ETFs, the iShares MSCI Mexico ETF (NYSEArca: EWW) was down 2.5% at $49.04 and the iShares MSCI Canada ETF (NYSEArca: EWC) was down 1.05% at $42.44 in the first 30 minutes of trading on Tuesday. The iShares China Large-Cap ETF (NYSEArca: FXI) was last seen down 0.8% at $29.45 but this ETF is down 9.8% from the November 5 election day and is still up 22% YTD.
Many large companies have operations all throughout North America outside of the United States, and many have overseas factories and overseas suppliers as it is a global economy.
Both Baird and Wolfe Research have warned that tariffs will directly hurt the U.S. auto industry. One report even suggested it would add $3,000 per vehicle and reduce demand by 1 million vehicles. Ford Motor Company (NYSE: F) was down 2.1% at $11.16 and General Motors Company (NYSE: GM) was down 6.8% at $56.10. On top of manufacturing outside the U.S., many parts and components come from outside the U.S. Ford’s stock is down 8% YTD and GM’s stock is up 54% YTD.
The move also put pressure on auto parts makers as well. Shares of Lear Corporation (NYSE: LEA) were down 4.2% at $96.71, and its stock is down over 31% YTD. Shares of Magna International Inc. (NYSE: MGA), based in Canada, were last seen down 3.9% at $44.64 and its stock is down 24% YTD.
Dollar stores remain in limbo after already having posted an atrocious year. Dollar General Corporation (NYSE: DG) was last seen down 1.9% at $75.12 and its shares are down 45% YTD. Dollar Tree, Inc. (NASDAQ: DLTR) was last seen down 2.4% at $68.11 and its stock is down an even worse 52% YTD.
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Apple Inc. (NASDAQ: AAPL) still has a lot of reliance on China, and even after diversifying some manufacturing efforts it is still a company with an overwhelming majority of its goods produced overseas and brought into the U.S. Tim Cook has a reported personal relationship with Trump that has kept this issue from being the subject here. Apple shares were last seen up 0.4% at $233.90.
Southern Copper Corporation (NYSE: SCCO) mines and refines copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. Its reaction on Tuesday was down by 2.3% at $99.62 and its cumulative drop since election-day has been nearly 12%. While this is a supplier of materials rather than goods, copper is used in just about every physical good imported and exported. BofA Securities has an Underperform rating on Southern Copper and it trimmed its price objective to $76 from $77 in the call. While BofA’s notes call it as an expensive valuation and having macro concerns, here is what BofA is saying in “uncertain times for metals” as a caution:
We are concerned about macro uncertainty especially around trade disputes moving into 2025, and we do not expect visibility to improve meaningfully until President-elect Trump has taken office on 20th January; even then there are question marks as to how contentious relationships between the US and other countries could be.
Constellation Brands Inc. (NYSE: STZ) is US-based but it imports many beers (including Corona), wines and liquors. Its shares were last seen down 4.45% at $230.90. The stock is down only about 2% since election-day and it is down 4.5% YTD. Its rival Brown-Forman Corp. (NYSE: BF-B) was last seen down 3.1% at $41.25 on Tuesday morning.
The reality is that the entire “Trump Tariff Trade” has been in-play and is likely to continue evolving ahead of Trump’s inauguration in January. There are many lobbyists and industry insiders who have not yet even been able to get meetings with the incoming administration members and existing insiders that will remain in Washington after January. And, as always, many companies manage to score points by making other concessions that get around what would seem to be an immediate victory for their shareholders and for the politicians involved.
