US Stocks Drop as Trade War Fears Intensify

(Bloomberg) -- US stocks declined on Friday, led by automakers and China-exposed companies, after the White House announced President Donald Trump's plans to impose tariffs on Mexico, Canada, and China.

Key Points:

* A UBS Group AG basket of stocks vulnerable to tariffs fell 3.7%.
* The S&P 500 Index closed down 0.5% after erasing gains of up to 0.8%.
* The Bloomberg Dollar Spot Index and Cboe VIX Index rose following the news.

Sectors and Stocks Impacted:

Autos:

* The US auto industry, with its global supply chain and significant exposure to Mexico, Canada, and China, is expected to be heavily impacted.
* General Motors Co., Ford Motor Co., and Stellantis NV are likely to face volatility due to the high risk of tariffs.
* Every 10% Mexico tariff could translate to a 20% hit to GM's earnings per share and a 10% loss for Ford's.
* The S&P 500 Auto Parts & Equipment Index could also be affected, as suppliers' operations are largely based in Mexico.

China-Exposed Stocks:

* Stocks with high exposure to China are particularly vulnerable due to Trump's aggressive stance on trade with the Asian nation.
* Companies like Air Products and Chemicals Inc., Celanese Corp., and BorgWarner Inc. are likely to be affected.
* The Nasdaq Golden Dragon China Index, which includes companies that trade in the US but operate in China, dropped 3.5% on Friday.

Chipmakers and Semiconductor Equipment:

* Chipmakers and semiconductor manufacturers are also expected to be impacted, as their supply chains extend across the globe.
* Nvidia Corp., Broadcom Inc., and Qualcomm Inc. are among the companies with significant exposure to China.

Industrials:

* Industrial manufacturers like Deere & Co., Caterpillar Inc., and Boeing Co. could be impacted due to their global operations and sensitivity to trade tensions.
* Deere, Regal Rexnord Corp., and Cummins Inc. are potential losers, while companies like Paccar Inc. and Oshkosh Corp. may benefit.

Solar and Mining:

* Solar companies, including Maxeon Solar Technologies Ltd. and SunPower Corp., could face risks due to China's dominance in the industry's supply chain.
* Miners like MP Materials Corp. and Nouveau Monde Graphite Inc. may also be affected.