Investing.com – The US trade landscape is under scrutiny as investors brace for potential tariff escalation under the new administration.
Barclays (LON:) Mexico's growing importance as the United States' largest trading partner raises concerns about the impact of potential import tariffs, analysts said on the near-visibility of goods crossing the U.S. border.
The 2019 US-China trade war serves as a benchmark for potential challenges.
Analysts point to a decline in domestic rail and trucking volumes, as well as a contraction in global freight markets, during that period. While tariffs could disrupt trade with Canada and Mexico, trade between North American partners has expanded under the previous U.S.-Mexico-Canada Agreement.
Escalating tariffs with China are likely to impact global freight service providers and Western railways more, especially those that rely on grain exports. Broader measures affecting Europe or North America could disrupt ground transportation sectors such as trucking and rail.
Consumer goods remain a focal point. Electronics, which account for one-third of U.S. consumer goods imports, are sourced primarily from China and Mexico. Imports of clothing and shoes have shifted significantly from China to Southeast Asia in recent years. Companies like Ralph Lauren (NYSE:) have reduced their reliance on China, with sourcing down to single digits as of late 2024.
Industrialists also face risks. Sectors that rely heavily on imports from Mexico, China, and Canada include automotive components, heating, ventilating and air conditioning equipment, and electrical tools. Companies like Stanley Black & Decker (NYSE:) and Rockwell Automation (NYSE:) may see price pressure, while net issuers like Honeywell (NASDAQ:) and 3M may fare better.
European logistics companies are also exposed to the trans-Atlantic and trans-Pacific trade lanes. Potential disruptions, such as port strikes, could exacerbate challenges facing global supply chains.
