Goldman Sachs strategists have raised concerns about the potential toll of tariffs on American companies as the US election campaign gains momentum. They have pointed out that tariffs could have a significant impact on companies with high international revenue exposure. This is due to the risk of retaliatory tariffs and heightened geopolitical tensions that may arise as a result.
The strategists at Goldman Sachs emphasized that tariffs could create a headwind for stocks with high international revenue exposure. Companies that rely heavily on international suppliers may face additional challenges if tariffs are imposed. The prediction markets currently suggest slightly higher odds of a Trump presidency, which has implications for potential tariff increases.
Uncertainty Surrounding Tariff Increases
While there is substantial uncertainty surrounding the size and scope of potential tariff increases, Goldman Sachs indicated that such increases are likely in the event of a Trump victory. The outcome of the US presidential election is expected to have a significant impact on the US dollar and the relative performance of domestic-facing versus internationally-exposed firms.
Goldman Sachs referenced the impact of tariffs announced by the US against China in 2018 under the Trump administration. They noted that during that time, domestic sales outperformed international sales by 9 percentage points. This historical observation underscores the potential impact that tariffs can have on the performance of American companies, particularly those with high international exposure.
The looming threat of tariffs presents a significant risk to American companies operating overseas. The uncertainty surrounding the outcome of the US presidential election further complicates the situation, with implications for the performance of stocks with high international revenue exposure. Companies will need to carefully monitor developments and adapt their strategies to navigate the potential challenges posed by tariffs in the current economic landscape.