KNCT - Estimating The Potential Impacts Of U.S. Tariffs On Economies And Markets

2025-02-14 05:20:00 ET

Summary

• Our research estimates that the proposed slate of U.S. tariffs on key trading partners would result in a 60 to 80 basis points increase in cost structures across most sectors of the global economy.
• During 2018-19, when the U.S. imposed tariffs on steel and aluminum products from most other countries — in addition to a wider array of tariffs on Chinese products — REITs and infrastructure were generally the strongest-performing asset classes.
• If the current proposed tariffs are implemented, our model indicates that the U.S. energy, materials, industrials, and consumer discretionary sectors are likely to be the most impacted — and the U.S. financials and communications sectors the least impacted.

U.S. trade policy remains highly fluid, with the government announcing several tariff proposals since President Donald Trump took office last month . As of this writing, the Trump administration has implemented a 10% tariff on imports from China and announced plans to enact a 25% tariff on all imported steel and aluminum products in early March. In addition, the U.S. may move forward with an earlier plan-which was put on pause last week-to tax all Canadian (excluding energy) and Mexican imports at a 25% rate beginning next month. Finally, the U.S. administration is also reportedly looking at the imposition of reciprocal tariffs (i.e., imposing the same tariffs on imports that U.S. exports face) to all U.S. trading partners....

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