3 April 2025
Following President Trump’s announcement of a universal tariff of 10%, along with harsher tariffs for particular countries, a number of companies are going to be hit.
Chris Beckett, head of equity research at Quilter Cheviot, said: “These tariffs will have a profound impact on the global economy. While some of the tariffs could have been worse, these are still extreme levels we are seeing. Growth will be down and inflation up and this is ultimately going to hit consumers and consequently result in lower earnings for companies. Any company producing goods outside of America is going to struggle and there are no quick fixes.”
Below, equity analysts from Quilter Cheviot have identified the companies they believe to be most affected, along with a handful that could indeed benefit from the economic policies announced.
Food and drink
Chris Beckett, head of equity research at Quilter Cheviot:
“What we see from these tariffs is a huge number of inconsistencies that is going to make it very difficult for countries to navigate. For example, as we understand it Mexican beer will have tariffs slapped on it, but tequila won’t.
“Ultimately, the major loser here is Diageo, given its presence in the US market and the specialist products it makes, but thankfully for its sake it could have been a lot worse. Scotch whisky got off lightly with just a 10% tariff being added, though we saw the impact previous taxes had on the industry back in Trump’s first presidency. The UK government will hope to appeal to Trump’s Scottish roots to get a carve out, but the likelihood seems low.
“Likewise, someone like Diageo will try to get exemptions for the likes of Guinness and other drinks where provenance matters. America, for instance, cannot make Champagne or Cognac, but for now it appears Trump does not care about this and is simply concerned with consumers buying American. As such, we expect the likes of Pernod Ricard and LVMH to also suffer and potentially be left with a glut of products that could end up having a deflationary effect in other markets.
“Given the US consumer is likely to see higher prices and be directly affected, then spending will be cutback on. It will be crucial to watch the likes of Walmart, Target and Kroger, as these will be barometers for how destructive these tariffs will be for consumer confidence.”
Consumer goods
Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
The US accounts for over a third of global sportswear demand. This is higher for some brands, such as Under Armour (60%), and lower for others including Adidas and Puma (low 20s%). Nike sits around the average at 40%. However, as Asia is the primary sourcing hub for sportswear, the cost of business has just gone through the roof. Existing inventory in the market and with retail partners will slightly delay the impact on consumers, but only for a few months. Given the scale of tariffs, prices will inevitably rise, creating a recessionary effect. US brands could also be impacted further, should consumers decide to boycott like they did in China in response to their stance on cotton produced in Xinjiang.
Meanwhile, for the luxury goods companies, the 20% tariff imposed to the European Union, where most European luxury goods are produced, is higher than expected. However, Switzerland will face tariffs of 31%, which would mostly impact Swiss watchmakers and some jewellery makers such as Richemont. The most impacted stocks will be those with the highest revenue exposure to the US, so Brunello Cucinelli (34%), Pandora (31%), Ferragamo (31%), LVMH (25%), Kering (24%) and Richemont (20%).
The tariff impact to the earnings of these companies may not be as intense though, as luxury companies have robust pricing power. We expect all brands to implement price increases by single-digit percentages in the US in the coming weeks and to identify cost savings opportunities in their US and global operations to mitigate some of the tariff impact. Companies with strong pricing power and higher-end positioning such Hermes and Richemont might find it easier to mitigate the impact. However, how the US (and global) luxury consumer responds to potentially reduced global economic growth remains unknown.
Automotives
Valechha:
“The reciprocal tariffs announced will not be in addition to the vehicle import tariffs first spoken about last week - that is, 25% on all imported vehicles and parts, with an exemption for USMCA complaint vehicles and parts. While the sector may feel it just dodged a bullet, we remain concerned that vehicle and parts tariffs are here to stay and will add a substantial cost burden to the sector.
“U.S. original equipment manufacturers (OEMs), such as Ford, GM, Stellantis, and Tesla, see a lower impact than all other, with Tesla coming out on top. European OEMs have limited spare capacity to increase production at their existing US plants and/or orientate more of that production towards the local US market. Regardless, we question whether OEMs want to upend complex supply chains, especially if the tariff hike proves to be shorter-lived than President Trump presently promises.”
Pharmaceuticals and medical technology
Sheena Berry, healthcare analyst at Quilter Cheviot:
“For now, pharmaceutical products are exempt from reciprocal tariffs, recognising the importance of the medicines. It will likely remain in focus and create a bit of an overhang on companies though. Large pharmaceutical companies have a global footprint with most companies generating 40%-60% of sales in the US. Whilst a number will manufacture a significant portion of drugs in the US for the US, the companies have subsidiaries outside the US which hold the intellectual property and/or manufacture drug products. This is a factor in determining the effective tax rates for these companies.
“Whilst AstraZeneca and GSK are the two UK’s big pharmaceutical companies, less than 10% of sales are generated from the country with both having manufacturing and R&D facilities in the US. As a result, we are likely to see pharmaceutical companies consider additional investment in the US. Recent examples of this include US companies Eli Lilly, Merck and Johnson & Johnson, announcing multi-billion-dollar domestic investments. Whilst pharmaceutical products are currently exempt, companies won’t be spared entirely given they rely on imports for a number of categories that help in the drug development process, but these should be manageable given the low cost of goods in the sector.
“On the other hand, the MedTech and life science sectors will likely feel the most direct impact from tariffs in healthcare. Details from companies will be needed as exposure will be dependent on where products are assembled, finished, and/or sold. There are certain categories within MedTech that may see some benefits from these tariffs given their likely inflationary effect and the fact there is resilient demand for the products. Furthermore, these companies are primarily producing goods in China for the Chinese market. The bigger concern for life sciences companies is if China responds with reciprocal measures, as this sector has a large revenue exposure to China.”
Technology
Ben Barringer, global technology analyst at Quilter Cheviot:
“Initially there is very little primary impact on the tech sector as many of their services are exempt, while the US imports very few semiconductors in their raw form. Where the big problem lies is the knock-on effect of these tariffs. Chips are imported as part of cars and if we are to see demand for cars get hit then this will have an effect on the likes of Infineon.
“Big tech is also not immune. Apple makes 90% of its products in China, with 10% in other Asian countries such as Vietnam and India. These countries are facing the harshest tariffs, so we can expect iPhones and Apple Watches to go up in price, while hitting the profits of the company significantly. Switching production to the US is neither easy, nor cheap.
“The tariffs are also likely to create demand destruction, which means cutbacks on software and cloud spending. Alphabet, will see a double whammy with digital advertising also cut back on in a tougher economic environment – with Meta also being hit in this regard.
“There are very few winners from a tech perspective, but Netflix could be one beneficiary. While the cost of content production will rise, TV is a fairly defensive sector and one of the last things people cut back on. It is enjoying an incredibly dominant position in the entertainment sphere just now and can use this to great effect during any economic downturn.”
Aerospace and defence
Matt Dorset, equity research analyst at Quilter Cheviot:
“Defence names have very little exposure to US tariffs. The US does not import much from Europe, and European names with high exposure to the US largely have production in the US which insulates these businesses from tariff threat. For example, BAE has around a 40% exposure to the US, but this is via US domiciled production.
“On the other hand, commercial aerospace is more exposed given complex global supply chains, with 70% of an aircraft’s parts outsourced to suppliers. In addition, for Airbus, a substantial part of the order backlog is from US airlines – in 2024 about 20% of Airbus commercial jet deliveries were to US customers. Airbus may shoulder some of this cost, but largely it will be passed onto airlines, and Airbus can mitigate this by partially supplying US customers from its US production facility in Mobile, and by prioritising deliveries to non-US customers.
“In the event of retaliatory actions from Europe and other countries, we expect Boeing to suffer more than Airbus due to its higher share of non-US deliveries compared to Airbus's share of US deliveries. There will also be second order impacts on aftermarket players as tariffs hit GDP, this may reduce engine flying hours and in turn aftermarket profits.”
Transport
Dorset said:
“Clearly, in the transport sector both freight forwarders and airlines will be impacted by US tariffs. Tariffs will impact global GDP which in turn will reduce demand for goods, and consequently global trade volumes will be negatively impacted.
“European logistics names have around 20-30% revenue exposure to the Americas of which the US makes up the predominant share – for example, for DSV, exposure to the Americas is 22%. That said, the negative impact of reduced trade volume will be partially offset by the increased opportunity for freight forwarders given increased complexity, which increases the value-add of their offering to clients and may support margin expansion. Airlines will also suffer given the relationship between flight volumes and GDP, as well as potential increased aircraft costs as Airbus passes on tariff costs to airline customers.”
Financials
William Howlett, financials analyst at Quilter Cheviot:
“Within the financials sector, we would see the market infrastructure and exchange stocks (including LSEG and Euronext) as relative beneficiaries as trading volumes increase as the market digests these tariff announcements. These companies also benefit from recurring revenues relating to data subscriptions for example which leads to further resilience in earnings.
“We see the biggest risks among the banks. Fundamentally, banks are levered plays on the economies in which they operate. The outsized tariffs are seen against Asian economies and in that context, it is understandable that the Asian banks (HSBC and Standard Chartered) have sold off the most. We wait to see how central banks react and whether they see these tariffs as a one-off adjustment and therefore are more likely to cut rates to manage the economic fallout. This would create some pressure on net interest income for banks.”
Energy
Maurizio Carulli, global energy analyst at Quilter Cheviot:
“Energy and energy products are exempted from US tariffs. However, in the event US tariffs are maintained long-term and/or a trade war materialises, prolonged lower economic growth would likely occur. This would clearly soften the supply/demand outlook for oil, and Opec might be unlikely to step in at this time, hence the 6% decline on the oil price today.
“Impact of lower GDP growth would be more significant for refiners, though. Furthermore, the possibility of slower investment programs by the oil majors would make oil services companies more negatively affected. It is important to remind that it is possible that US tariffs may be diluted/removed over time and therefore the negative effect on energy companies may prove temporary, but it is simply too early to say. In a lower oil price scenario, energy companies with a strong balance sheet, like Shell and TotalEnergies in Europe and Chevron and ExxonMobil in the US would be more resilient in relative terms.”
Metals and mining
Carulli:
“The previously set 25% US tariff on imported steel and aluminium has been confirmed, while no copper import tariff has been introduced, for the moment, albeit this may change since the US is conducting a strategic review on critical minerals including copper. The indirect negative impact of US tariffs on iron ore may be mitigated by further China economic policy support. It is also important to remember that China represents more than 50% of global metals demand, while Europe 15% and the US only 10%.
“Because of the negative impact on global GDP, industrial production and consequently industrial metals demand, the aggressive US tariffs are a near-term headwind for metals and the mining companies. But long-term fundamentals are unaffected, with secular demand drivers for copper, aluminium and iron ore remaining, as well as supply constraints, particularly for copper.”