What Trump’s tariffs mean for equities


Scott Bessent, the new US treasury secretary, said he expected President Donald Trump’s tariffs to be a loaded revolver put on the negotiating table that would not be fired. It looks like it has been fired. However, unlike a revolver, it can be unfired, as the delays to the implementation of some tariffs demonstrates.

The recent announcement on goods exported from Canada and Mexico into the US should have been expected. However, the size of the tariffs are significant: a 5 per cent tariff would eat into an exporter’s profit margin; a 25 per cent tariff stops you exporting.

Canada and Mexico are very different targets for Trump tariffs.  

Regional differences

Canada mainly exports heavy crude oil to US refineries. The tariff announced here is lower – 10 per cent – but that is still greater than refinery margins. It would cost the US refineries a fortune to change oil source or to reconfigure for different crude feedstock. 

After crude, Canada’s largest export to the US is cars – mainly ones made by Ford and General Motors. Goods face tariffs on the basis of where they are made and regardless of who makes them. Most of America’s largest companies are global and so have much to lose from a reduction in trade through tariffs.



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