These 5 Stocks Could Suffer If Trump’s Tariffs Stick Around
Written by
Vance Cariaga
Edited by
Jenna Klaverweiden
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
One of the cornerstones of President Donald Trump’s economic agenda is to impose stiff tariffs on imported goods, and Wall Street is not exactly thrilled about it. After Trump announced plans to stick 25% tariffs on imports from Canada and Mexico, the stock markets were rattled, and the president almost immediately paused the decision.
While investors wait to see how the Canada and Mexico tariffs play out, Trump has already put other tariffs into motion. In early February, he added an extra 10% tariff on Chinese goods. A couple of weeks later, he announced plans to impose auto import tariffs of about 25%, along with similar tariffs on semiconductors and pharmaceutical imports, Reuters reported.
Those moves would have an obvious impact on foreign carmakers, tech firms and drug companies. But plenty of other stocks could be impacted as well, according to David Kostin, chief US equity strategist at Goldman Sachs Research. In a report, Kostin explained that companies’ profit margins could suffer if they decide to take on higher costs. If they instead decide to pass the costs to consumers, their sales could struggle.
Here are five stocks that could suffer if Trump makes good on his plan to hit imported goods with high tariffs.
Carrier Global Corp. (CARR)
As a result of new tariffs, costs could be raised and profit margins could fall for Carrier and other U.S. manufacturers, Barron’s reported, citing a Bank of America Securities report. According to that report, margins could be dragged down by an average of 1.2 percentage points if a 10% across-the-board tariff were imposed — which means a 25% tariff would cause even more damage.
Carrier, best known for its HVAC systems, was listed by Bank of America as one of the manufacturers most at risk from tariffs. One major problem cited by the Air Conditioning, Heating & Refrigeration News website is that Carrier and other major HVAC manufacturers have production facilities in Mexico and also get components from China.
Charles River Laboratories (CRL)
A recent Investor’s Business Daily article listed Charles River Labs as one of the stocks that is most vulnerable to Canada and Mexico tariffs because of its dependence on revenue from America’s neighbors to the north and south.
Combined, the two countries account for about 12.1% of Charles River’s revenue, according to Investor’s Business Daily.
Costco (COST)
Investor’s Business Daily ranked Costco as the most at-risk stock when it comes to the Canada tariffs because it has close ties with Canada. According to company disclosures, the warehouse club operator got nearly 14% of its revenue from Canada during the previous 12 months.
Lululemon Athletica (LULU)
The Canadian sportswear brand could be vulnerable to Trump’s tariffs because it relies on imports from China, CNBC reported.
Lululemon also depends on China for a big chunk of its business. According to CNBC, any “negative sentiments” from trade actions could end up hurting its business in China.
Tesla (TSLA)
This might seem like an odd pick, considering that Trump has enlisted Tesla CEO Elon Musk to oversee efforts to slash the U.S. government and close down whole departments. Despite that relationship, Tesla itself could feel some serious pain from high tariffs.
As CNBC reported, Vaibhav Taneja, Tesla’s chief financial officer, said in a January earnings call that tariffs could cut into the company’s profitability.
“Over the years we’ve tried to localize our supply chain in every market, but we are still reliant on parts from across the world for all our businesses,” Taneja said, adding that tariffs would impact the business and its profits.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
More From GOBankingRates
