UBS Warns: 100% Tariffs on Chinese Imports to Slash EPS of Many Companies
UBS warns that the upcoming 100% tariffs on Chinese imports, set to take effect in November, could significantly impact the earnings per share (EPS) of many companies. The median Softline stock may see a 10% reduction in EPS, with some companies facing much larger losses.
The impact varies greatly depending on the level of exposure to Chinese imports. Designer Brands, for instance, could see a staggering 1584% reduction in EPS, while Gildan Activewear, with minimal exposure, remains unaffected.
Major pharmaceutical companies like Roche and Novartis, and heavy truck manufacturers such as Traton (Volkswagen Group), Daimler Truck, and Volvo are also at risk. Porsche AG may also suffer due to its reliance on the Chinese market. Companies with high exposure may take longer to adapt but can mitigate long-term effects.
Off-price retailers like Gildan Activewear, TJX, and Burlington Stores could potentially benefit from the tariffs, as they source fewer products from China.
The new tariffs will disproportionately affect companies heavily reliant on Chinese imports. While some may face severe short-term impacts, others could see minimal effects or even potential benefits. Companies are advised to assess their exposure and consider mitigation strategies to navigate these changes.
