According to Zhitong Finance APP, the US stock market has continued to rise since the election, and the market clearly welcomes Trump's victory, but if the president-elect of the USA carries out his tariff threats, turmoil may follow.

The policies of the new government remain largely uncertain, including Trump's renewed threats last month to impose tariffs on China, Canada, Mexico, and other trade partners of the USA. The timing and scope of the new tariffs are also unclear, and the severity of their impact on the USA may depend on whether the target countries take their own measures.

However, economists' worst-case predictions paint a worrying picture.

An extreme long-term scenario predicted by the Oxford Economics Institute suggests that global trade could shrink by up to 10%, and the USA's economic growth rate could be about 1% lower than current expectations. Other forecasts indicate that tariffs will hurt corporate profits, especially in the retail, industrial, and CAILIAOHANGYE sectors, while also driving up inflation.

David Kelly, chief global strategist at JPMorgan Asset Management, stated: 'Tariffs are basically unfavorable for economic development. In fact, this could produce a stagflation effect, simultaneously increasing inflationary pressures and slowing economic growth.'

Trump's new threats have triggered volatility in the Forex market, but the US stock market has not been significantly affected. As the market continues its rise of over 26% this year, the S&P 500 Index has repeatedly reached new historical highs.

Barclays strategists estimate that proposed tariffs on Canada, Mexico, and China, as well as any retaliatory actions, could drag down S&P 500 Index earnings by 2.8%.

Barclays Bank stated that the materials and non-essential Consumer sectors may face double-digit profit declines due to their significant supply and production operations in Mexico and Canada.

The retaliatory tariffs from target countries will also intensify the impact on profits.

Bank of America Global Research predicts that if tariffs on China double to 40% and tariffs on the rest of the world (excluding Mexico and Canada) rise to around 8%, the S&P 500 Index's earnings will be hit by 1%. However, the bank's strategists wrote that due to the damage to overseas sales from retaliatory tariffs, the impact on profits will rise to 5%.

Deutsche Bank economists stated that the tariffs could also raise the core measure of the Personal Consumption Expenditures (PCE) price index from 2.3% next year to around 2.5%.

Trump's campaign team did not immediately respond to a request for comment.

Trump 1.0

Trump described tariffs as the "most beautiful word in the dictionary" and argued that his plan would rebuild America's manufacturing base, increase U.S. job opportunities and incomes, and generate trillions of dollars in revenue for the federal government over the next decade.

Some investors are examining Trump's tariff policies from his first term to understand the potential impact this time.

Data from RBC Capital Markets shows that during the U.S.-China trade war in 2018, the materials and industrial sectors were the worst-performing industries, declining by more than 5% over nine months.

The bank indicated that defensive stocks, which are popular during uncertain times, have the highest ROI, with both utilities and Real Estate rising by more than 10%.

RBC's strategists lowered the rating of the CAILIAOHANGYE from 'Shareholding' to 'Market Perform' earlier this month, citing poor performance during 2018 as a contributing factor. Since Trump won the election on November 5, the industry has declined by 3%, while the S&P 500 Index has risen by 4% during the same period.

An analysis by Citibank shows that the Technology Industry tends to perform poorly on days when the USA announces tariffs or China takes retaliatory measures in 2018 and 2019, particularly in the Hardware and Semiconductors sectors.

A report from Citibank's strategists stated, 'However, given that they remain at the forefront of the AI story, if tariffs are announced, they may benefit from prior Orders, so we are not overly concerned about the immediate risks.'

David Lefkowitz, Head of US Equities for UBS Group Global Wealth Management, stated that higher tariffs on China could target retailers, industrial companies, and Technology Hardware firms. Lefkowitz noted that well-known American brands such as Apple (AAPL.US), Starbucks (SBUX.US), and Nike (NKE.US) may face retaliatory measures.

Lefkowitz stated that Auto Manufacturers in Canada and Mexico could feel the pressure from any tariffs. Following Trump's tariff pledge last month, General Motors (GM.US) and other automotive stocks faced sell-offs.

However, bullish investors point out that various components of Trump's economic agenda—including tax cuts and deregulation—could offset the effects of tariffs. Trump's choice of prominent investor Scott Bessent as Treasury Secretary, the top economic official in the USA, has also been welcomed on Wall Street.

Lefkowitz noted that historically, Trump has measured his success, at least to some extent, by the strength of the stock market. He indicated that this might make him cautious about implementing tariffs to avoid severely damaging the stock market.

They are trying to promote economic growth in the USA, Lefkowitz stated. The tariffs will eventually gradually decrease, and Trump tends to focus on market performance. Therefore, so far, the market has been downplaying the voices we hear regarding tariffs.

Editor/ping