In a recent update, U.S. President Donald Trump, on January 31, 2025, signed an executive order, “Unleashing prosperity through deregulation.” Trump was in his Oval Office in Washington D.C. when he made this announcement. Besides, he also addressed the press regarding the tariffs against China, Canada, and Mexico.
Following the announcement of these tariffs, the U.S. stock market experienced a significant shakeup. This decision potentially triggered a worldwide trade war, severely impacting various industries including automotive, industrial, retail, and beverage sectors that rely heavily on international supply chains.
President Trump imposed a 25% tariff on goods imported from Mexico and Canada and a 10% tariff on Chinese imports. However, after an agreement with Mexican President Claudia Sheinbaum, he decided to suspend the Mexico tariffs for a month. In return, Sheinbaum consented to dispatch 10,000 soldiers to her country’s border to combat drug trafficking. Trump also escalated his tariff threats to the European Union.
These tariffs could lead to escalated cost of goods transportation across borders, disrupt supply chains, and possibly dampen business confidence. Goldman Sachs voiced concerns that Trump’s latest move might result in a 5% decline in U.S. stocks due to an impact on corporate earnings. Here are some industries and stocks that are most likely to be affected:
Automobile Industry: The imposed tariffs could severely affect the global automobile industry, which is largely dependent on manufacturing operations across North America. Major Detroit car manufacturers like General Motors, Ford, and Stellantis might face difficulties due to disrupted supply chains and may have to transfer production from overseas factories to the United States.
Food and Beverage Industry: Constellation Brands, a major alcohol importer from Mexico, is leading a sell-off among alcohol stocks. Canada has threatened to remove American alcohol from its government-controlled liquor shelves in response to Trump’s tariffs. Additionally, restaurant chain Chipotle Mexican Grill and avocado company Calavo Growers could face the brunt due to more expensive supplies, as these companies import avocados from Mexico.
Retail Industry: Sportswear brands Nike and Lululemon could be hit by Trump’s tariffs due to their heavy reliance on Chinese imports, including fabrics. The negative sentiment from the trade war could also affect their significant business in China. Discount retailers such as Five Below, which heavily rely on imports from China, could be among the hardest-hit businesses. Canada Goose, a luxury outerwear firm based in Canada, could also feel the pinch.
Railroad Industry: The tariffs could be detrimental to railroad operators. Heavy duties could slow down the movement of goods to the U.S., thereby impacting their revenue and profits.
Chinese E-commerce: Trump’s tariffs also targeted a trade provision that has been instrumental in the rapid growth of budget online retailers, including Temu. The orders against China, Canada, and Mexico halt a trade exemption, known as “de minimis,” which allows exporters to ship packages worth less than $800 into the U.S. duty-free. Consequently, PDD Holdings-owned Temu and Alibaba’s AliExpress may no longer be able to exploit this loophole to sell cheap apparel, household items, and electronics.
Please note that this information is subject to change. Dollar General has clarified that its direct import percentage stood at 4% in 2023.
