Trump's Tariffs Hit Wall Street

President Trump has levied tariffs on Canada, Mexico, and China, unsettling investors who had anticipated a robust economic year in 2025. The tariffs, which range from 10% to 25%, are expected to impact economic powerhouses worldwide.

Wall Street Reactions

Economists and strategists agree that the tariffs will cause economic pain. The Dow Jones Industrial Average futures have fallen by over 500 points as a result.

Morgan Stanley

* Predicts a US recession and higher inflation.
* Expects a 0.7% to 1.1% reduction in US growth over the next 3-4 quarters.
* Sees bullish potential for US Treasury duration and US Dollar strength against the Peso and Canadian Dollar.

EvercoreISI

* Forecasts a hit to US growth due to reduced exports, investment decline, and job losses.
* Estimates a 40 basis point increase in inflation and a 40 basis point drag on growth in the second half of the year.

JP Morgan

* Identifies financial risks for Alcoa, GrafTech International, and Cleveland Cliffs.
* Notes that Alcoa's production capacity in Canada could lead to material impact on near-term earnings.
* Suggests that GrafTech's US facility may reopen if demand destruction persists.

22V Research

* Expects China to impose symbolic tariff increases on US imports.
* Anticipates light informal retaliation from China.
* Believes Beijing could address US concerns about fentanyl exports to Mexico.

Bernstein

* Sees a negative impact on Bitcoin and crypto markets due to risk-off sentiment.
* Emphasizes Bitcoin's long-term value as a store of value, despite short-term price fluctuations.

Vontobel Strategy Team

* Highlights the unpredictable outcome of the trade war.
* Suggests that many uncertainties remain, including the value-based calculation of tariffs.
* Notes that Swiss companies may need to pass on additional costs to customers.

Deutsche Bank

* Predicts imminent recession in Canada and Mexico.
* Expects US core PCE to remain above 2.5%.
* Believes the dollar should initially appreciate.
* Forecasts a reduced GDP for the EU.

BMO Capital Markets

* Emphasizes the potential for opportunities amidst market volatility.
* Maintains overweight sector recommendations for Discretionary, Financials, REITs, and Technology.
* Advises investors to focus on quality, cash flow, and reliable companies.

TD Securities

* Estimates a 50 basis point increase in inflation projections.
* Upgraded fourth quarter inflation forecast to 3.2% year-over-year.
* Sees a high bar for Fed rate hikes and anticipates easing in the second half of the year.

Stifel

* Highlights the impact of tariffs on footwear and apparel industries.
* Predicts increased supply chain realignments.
* Identifies Kontoor Brands, Warby Parker, and Yeti as companies with direct exposure to imports from high-duty countries.