Trump’s announcement that the United States will impose a 25% tariff on steel imports and a 10% tariff on aluminum imports has become the latest cause of concern for the U.S. economy and Wall Street. The tariffs are likely to result in an increase in raw material cost for manufacturers that use these metals.
Against this backdrop, with the help of
an article published on npr.org, we highlight some sectors that could be impacted the most from the tariffs (read: Watch These ETFs as Trade War Risks Rise). Auto
Both steel and aluminum are vital to the production of cars and trucks sold in America and would push up the sale prices of those vehicles considerably. The American Automotive Policy Council believes that the change would put the U.S. auto industry at a "
However, the price hike won’t be the same for all. CNBC reported that
General Motors GM sees only a modest impact because it buys 90% of “steel for U.S. production from U.S. suppliers." On the other hand, Honda Motor Co HMC said that “imprudent tariffs imposed on imported steel and aluminum would raise prices on both domestic and imported products, thus causing an unnecessary financial burden on customers.”
In this situation,
First Trust NASDAQ Global Auto Index Fund should be monitored closely. However, since the fund invests only 19.67% in the United States, severe threat to the product is unexpected (read: CARZ ETFs in Focus Post Automobile Earnings). Alternative Energy
Solar projects, wind turbines and energy storage units are also likely to be pricier. The tariff could result in a hike in the cost of offshore platforms and pipelines. In any case, the Trump administration's
30% tariff on imported solar cells and modules was put into effect this year (read: Trump's Import Tariffs: ETF & Stocks in Focus).
Now with extra price increases on steel and aluminum, “which are used in
ground-mount and rooftop solar racking systems,” the sector could be hit hard. Alternative ETFs including Guggenheim Solar ETF TAN and First Trust ISE Global Wind Energy Index Fund FAN should thus be followed with extra caution (read: Alternative Energy ETFs to Gain From First Solar Q4 Results). Aerospace
U.S. aerospace industry thrives on steel and aluminum imports to construct aircraft. About
80% of an aircraft is made of aluminum. Companies like Boeing Company BA, Lockheed Martin LMT and Northrop Grumman ( NOC Quick Quote NOC - Free Report) may come under pressure. Aerospace and defense ETFs like iShares U.S. Aerospace & Defense ETF ITA and SPDR S&P Aerospace & Defense ETF XAR may also feel the pinch. Candy
Aluminum foils are used to wrap chocolates. So, the tariff could lead to high costs for
Hershey Company and HSY Mondelez International Inc. . "Such a broad and sweeping order could have a negative impact on the entire U.S. economy, potentially costing U.S. jobs and ultimately, hurting American consumers through higher prices for everyday products," according to the Hershey spokesman, as quoted on npr.org. MDLZ Beer
Last but not the least, how can investors forget the beer industry?
Imported aluminum is used to make beer cans. Companies like Molson Coors Brewing Company TAP, Anheuser-Busch Inbev SA BUD, Constellation Brands Inc STZ and Diageo Plc DEO may face the rising cost issue. At the same time, the announcement puts Spirited Funds/ETFMG Whiskey & Spirits ETF WSKY in focus. Consumer
Along with most market watchers, we too believe that companies will try to pass on some cost escalation to consumers. As a result, consumer ETFs like
iShares U.S. Consumer Services ETF IYC may get slightly hurt. Want key ETF info delivered straight to your inbox?
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