🎯 Trump shakes up global trade

Welcome back to another issue of Trendline!

Trump administration dropped a bombshell yesterday on the world - announcing sweeping tariffs on all countries trading with US.

Frankly, most of us are still trying to make sense of the news. Here are some charts to help you understand what’s going on 👇️ 

1) US imposes significant tariffs on its major trading partners: I have never seen anything like it. Trump administration imposed tariffs on more than 180 countries, including unlikely candidates like Heard and McDonald Island where no one lives.

The tariffs imposed on its major trading partners are severe, including historical allies like the EU, South Korea and Japan. Vietnam’s case is curious - A lot of companies were diversifying their manufacturing out of China into Vietnam. However, in yesterday’s announcement, Vietnam faces 46% tariff - the highest among US’s Top 20 trading partners by imports!

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2) Where does Trump’s tariffs stand historically: Based on yesterday’s announcement by Trump, BNP Paribas estimates that avg. US tariffs will rise to 22% (almost 10x compared to the current avg of approx 2.5%). This takes us back to - check notes - early 1900s! This news essentially dismantles most of the international world order put in place post World War 2. Are we ready for this?

3) Mag 7 stocks are more exposed internationally: This chart from Goldman is very interesting. 49% of sales for Mag7 companies comes from outside US, compared to only 26% for rest of the 493 companies in S&P 500. RUT (The smallest 2000 companies in Russell 3000 Index) and MID (Midcap stocks in US) are also less exposed to international sales - 21% and 25% respectively.

One has to dig through the cost structures and imports of each companies to clearly map out the the impact of tariffs, but Mag7 companies may be more directly exposed to retaliatory tariffs on the goods/services they sell overseas.

4) Footwear, Apparel stocks get crushed on tariff news: Tariffs are going to impact different companies differently. One sector particularly hit is footwear/apparel companies.

Nike, who has already been having a very tough year, now faces significant cost pressures due to the new tariffs. Nike sources 11% of its products from China, 44% from Vietnam, and 21% from Indonesia - 3 countries with significant tariffs imposed (see the first chart). The stock was down more than 14% on Thursday.

Other footwear companies who also took a hit on Thursday include Deckers Outdoor Corp. (DECK), Crocs (CROX), On (ONON), and Skechers (SKX), which are down 14%, 14%, 16%, and 17%, respectively.

5) Tesla car deliveries fell 13% in Q1-25: Unrelated to tariffs - Tesla’s woes continues in Q1-25. The car company is facing stiff competition from rivals in China and European markets. Elon Musk’s active political involvement in Trump administration isn’t helping as there are lot of active protests against Tesla cars in major markets.

In Q1-25, Tesla delivered 336.7K cars to customers, a decline of 13% from Q1-24 and -32% from Q4-24. Tesla stock is facing one of its worst drawdowns ever, down 44% from its peak at the time of this article.