In the following post, I would like to discuss the new US tariffs and their potential economic consequences. The background and the potential impact on inflation and companies, as well as the winners and losers on the stock market, will be discussed.

Again, of course, the stocks mentioned do not constitute investment advice, but merely serve as examples of possible beneficiaries or losers of tightening trade restrictions. Historical developments are no guarantee of future returns.

__________

In this post:

• Influence on inflation
• New tariffs in force
• Reaction of the countries
• Consequences for the global economy
• Winners & losers
• Investment opportunities

__________

The topic of "tariffs" is currently not only very present in the media, but the term "tariffs" has also been discussed with a strong increase in the past earnings calls of companies in the S&P 500, as the following chart shows [1].

The chart shows that the discussion about tariffs has intensified in recent months and is having an ever greater impact on the outlook in companies' annual reports.

The data is presented as a three-month average and broken down into various sectors, including e.g. industry, healthcare, consumer goods, information technology, etc.

I am curious to see how the stock markets will behave in the coming week. In addition to the current reporting season, the topic of "tariffs" will certainly dominate.

After the tough tariffs announced after Trump took office were not immediately enforced and there was a "slight" sigh of relief, there could now be a new reaction on the markets, as there was on Friday evening. slightly was already slightly noticeable on Friday evening when the markets turned towards the evening.

A looming trade conflict could not only affect individual companies, but also further fuel inflation in the US:

💰 Influence on inflation

On January 31, Deutsche Bank published a forecast on the potential impact of tariffs on the inflation rate [2]:

The chart compares the current forecast with the forecast before the "Trump" era and takes into account various scenarios for the passing on of tariffs (pass-through) by Canada and Mexico.

Two scenarios are considered: one with a 50% pass-through of tariffs (additional increase shown in dark green) and one with a 75% pass-through (light green). It is clear that the inflation rate could rise sharply again this year and fall again by 2027.

🛃 New tariffs in force & further measures planned

As of today, February 1, 2025, the US government and Donald Trump have imposed new import tariffs on Mexico, Canada and China:

• 25% on imports from Mexico and Canada
• 10% on imports from China

According to the White House spokesperson, these measures are, among other things, a response to the failure of these countries to stop the influx of fentanyl and illegal immigrants into the USA. [3]

But this is just the beginning:

From mid-February, the USA will also impose tariffs on strategic goods [4], including:

• computer chips
• pharmaceuticals
• Steel, aluminum and copper
• Oil and gas imports (but only from February 18 with reduced 10% tariffs so as not to burden US petrol prices immediately).

🚨 Trump relies on escalation - Canada announces retaliation

Yesterday, Canadian government representatives, including Foreign Minister Mélanie Joly, tried to prevent the tariffs in Washington, but to no avail.

Trump made it clear before his departure to Mar-a-Lago [5]:

"We have a 200 billion dollar trade deficit with Canada. Why should we subsidize Canada?"

The EU could also soon be targeted, as Trump hinted:

"Absolutely! The European Union has treated us so terribly!"

🔄 Canada's reaction:

Prime Minister Justin Trudeau announced that Canada will not back down and will respond with "swift and robust countermeasures".

The government is planning a three-stage retaliation strategy [5]:

• 1️⃣ Targeted punitive tariffs on US products coming from Republican states (e.g. orange juice, whiskey, ketchup, peanut butter and motorcycles).

• 2️⃣ Tariffs on steel products and machine parts from the USA.

• 3️⃣ Escalation: Stop exports of oil, gas and electricity to the USA

However, this last step in particular would be a double-edged sword, as Canada is heavily dependent on energy cooperation with the USA.

Economic experts in the US are already warning of the consequences of a trade war [5]:

• The new tariffs could increase the cost of living of an average US household by 800 dollars per year.
• The oil and gas tariffs could increase the price of petrol in the USA by up to 20 cents per liter.

But Trump remains firm:

"Maybe there will be short-term disruption, but in the long run the tariffs will make us very rich and very strong."

🌎 Possible consequences for the global economy

(a) Rising prices in the USA

• Technology & electronicsHigher chip prices are hitting companies such as Apple $AAPL (-4,63 %) , Dell $DELL and HP $HPQ (-5,92 %) as many of their components come from China.

• Healthcare costs: Pharmaceutical companies such as CVS Health $CVS (-0,22 %) and Walgreens Boots Alliance $WBA are facing higher purchasing costs.

• Construction & InfrastructureHigher steel prices are weighing on companies such as Lennar $LEN (+0,32 %) D.R. Horton $DHI (-1,25 %) and Caterpillar $CAT (-2,48 %) .

(b) Retaliation & new trade wars?

• China could impose tariffs on US products, which could affect e.g. Archer Daniels Midland $ADM (-1,36 %) Boeing $BA (-3,43 %) and Qualcomm $QCOM (-8,32 %) would be affected.

• The EU could make US imports more expensive, which would affect Tesla $TSLA (-6,86 %) , Ford $F (-1,41 %) and General Motors $GM (-1,22 %) could be harmed.

(c) Effects on the stock market

• Volatility is increasing as there is uncertainty about the consequences for various industries.

• Particularly affected: Technology and automotive stocks with global supply chains.

🏆 Winners & losers - which companies will benefit, which will suffer?

Possible beneficiaries of the tariffs

US manufacturers of steel, aluminum & copper

• Nucor $NUE (-3,79 %) , U.S. Steel $X and Freeport-McMoRan $FCX (-6,65 %) could benefit as foreign competition becomes more expensive as a result of the tariffs.

Domestic pharmaceutical and biotech companies

• Pfizer $PFE (-3,02 %) Moderna $MRNA (-4,23 %) and Eli Lilly $LLY (-3,36 %) could gain market share.

Energy companies with US production

• ExxonMobil $XOM (-2,64 %) , Chevron$CVX (-2,7 %) and Expand Energy $CHK (-4,46 %) could benefit from rising prices for US oil and gas.

Chip manufacturers with US production

• Intel $INTC (-5,15 %) and Texas Instruments$TXN (-4,45 %) have US factories and could gain market share.

😥 Companies that could suffer from the tariffs

Chip manufacturers with global supply chains

• Apple $AAPL (-4,63 %) NVIDIA $NVDA (-6,14 %) , AMD $AMD (-10,01 %) are dependent on Asian imports and could see higher production costs.

Car manufacturers with global suppliers

• Tesla $TSLA (-6,86 %) , Ford $F (-1,41 %) , General Motors $GM (-1,22 %) are under pressure because components from Mexico and Canada could become more expensive.

Companies with strong export business

• Boeing $BA (-3,43 %) and Caterpillar $CAT (-2,48 %) suffer from possible retaliatory tariffs.

US retailers with a high import share

• Walmart $WMT (-0,92 %) , Target $TGT (-4,66 %) and Nike $NKE (-4,98 %) could have to pass on rising prices to customers.

🧠 Possible investment strategies

Favor defensive sectors:

• Utilities (e.g. NextEra Energy $NEE (-1,61 %) Duke Energy $DUK (+0,97 %) ) and healthcare companies (e.g. UnitedHealth $UNH (-5,78 %) , Johnson & Johnson $JNJ (-0,5 %) ) remain more stable.

Exploit long-term opportunities in "reshoring":

• Intel $INTC (-5,15 %) , Eli Lilly $LLY (-3,36 %) , Nucor $NUE (-3,79 %) could benefit in the long term.

Conclusion: Will the trade conflict escalate further?

With the new tariffs, Trump is taking a confrontational stance and Canada, Mexico and China are preparing for retaliatory measures. If further tariffs on European goods follow, the situation could worsen.

❓Which stocks do you think could be most affected? Which beneficiaries do you see?

Thanks for reading! 🤝

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Sources:

[1] https://finance.yahoo.com/news/yahoo-finance-chartbook-44-charts-that-tell-the-story-of-markets-and-the-economy-to-start-2025-105856766.html

[2] https://finance.yahoo.com/news/2-charts-show-why-markets-are-skittish-about-trumps-tariff-policy-144318249.html

[3] https://www.faz.net/aktuell/politik/usa-unter-trump/trumps-verhaengt-zoelle-gegen-kanada-mexiko-und-china-110269990.html?

[4]

https://www.finanznachrichten.de/nachrichten-2025-01/64440108-trump-usa-werden-ab-mitte-februar-zoelle-auf-computerchips-stahl-sowie-oel-und-gasimporte-erheben-015.htm

[5] https://www.tagesschau.de/ausland/amerika/usa-trump-strafzoelle-100.html

Earnings next week.

Not much will happen before the holidays.

$RCAT (-12,94 %)
$GIS (-0,54 %)
$MU (-6,96 %)
$LEN (+0,32 %)
$ACN
$CTAS (-2,8 %)
$DRI (-3,42 %)
$PAYX (-0,22 %)
$NKE (-4,98 %)
$FDX (-6,02 %)
$CCL (-3,57 %)

But very interesting companies that might be found in one or the other portfolio here.

A successful week before the holidays.🙋🏼‍♂️

Earnings next week 🗓️

$MU (-6,96 %)

$NKE (-4,98 %)

$CCL (-3,57 %)

$FDX (-6,02 %)

$RCAT (-12,94 %)

$ACN

$BB (-7,21 %)

$LEN (+0,32 %)

$DRI

$CTAS (-2,8 %)

$MAMA

$FDS (-0,96 %)

$GIS (-0,54 %)

$HEIA (-0,34 %)

$ABM (-2,05 %)

$WGO (-5,9 %)

$AMTM (-3,13 %)

$BIRK (-3,37 %)

$REE

$TTC

$CAG

$AVO (-0,49 %)

$MLKN (-1,39 %)

$PAYX (-0,22 %)

$KMX (-2,7 %)

$FCEL

$SCHL (-3,98 %)

$SCS

$WS (-5,19 %)

$LW (-1,74 %)

$QIPT

$CMP

$MITK (-3,59 %)

$JBL (-5,69 %)

$EPAC (-1,49 %)

$OGI

$RICK (-6,46 %)

Winners of the US construction crisis?

The USA is in the midst of a deep construction crisis that has been worsening for years. High construction costs, rising mortgage rates and a severe shortage of affordable housing are weighing on the real estate market. Millions of Americans are feeling the effects.

The construction crisis: a problem that moves America

The dream of home ownership is becoming unattainable for many. And it's not just homeowners who are affected by rising costs, renters are too. This crisis has the potential to pose a lasting threat to the country's social and economic stability, making it a key issue in the recent elections.

To make matters worse, demand for housing remains high, while construction activity cannot keep pace. Particularly in the growing Sunbelt regions, where people are moving due to the low cost of living and better climate, housing construction is falling short of expectations. This shows a systemic failure that is attributable to both economic and regulatory causes.

The political debate has focused on two main questions: how can the Federal Reserve reduce financing costs through its interest rate policy? And how can innovative ideas such as "Freedom Cities" bring new momentum to housing construction? While Democrats rely on state subsidies and support programs, Republicans under Donald Trump have taken a different path. They are advocating radical deregulation and the creation of planned cities to increase supply and promote innovation.

Causes of the housing market crisis: how did it come about?

The causes of the current construction crisis are diverse and deeply rooted. A combination of economic, regulatory and social factors has caused the US housing market to falter more and more.

A key factor is rising construction costs, which have been fueled by several developments in recent years. Firstly, global supply chain issues, particularly during and after the COVID-19 pandemic, have driven up the price of building materials. Secondly, there is an acute shortage of skilled workers in the construction industry in the USA, which is pushing up wages and delaying projects. In addition, high land prices in urban centers are making residential construction expensive, especially in cities such as San Francisco, New York and Los Angeles.

Another driver of the crisis is the high mortgage interest rates, which are closely linked to long-term capital market interest rates. Even though the Federal Reserve has recently lowered key interest rates slightly - the deposit rate is currently between 4.5 and 4.75 percent - mortgage rates remain high. This is because these rates are not determined directly by the Fed, but by the capital market, which reflects the risks and return expectations of investors. The result is that buyers have less financial leeway, which further dampens demand for housing.

Finally, bureaucracy also plays a key role. Lengthy approval processes and complicated regulations make homebuilding a time-consuming and costly endeavor in many states. Even in regions with high demand, it often takes years before new construction projects can be realized. These regulatory hurdles significantly increase the bottleneck in the housing market.

Freedom Cities and interest rate cuts: Two ways out of the crisis

In view of the complex problems of the housing market, two possible solutions were discussed: lowering mortgage interest rates through the Federal Reserve's interest rate policy and the creation of "Freedom Cities", as proposed by Donald Trump.

The influence of the Federal Reserve

The Federal Reserve's interest rate policy plays a central role in the real estate market, as it indirectly influences the financing costs for buyers. The recent reduction in the deposit rate to between 4.5 and 4.75 percent could contribute to a fall in long-term capital market interest rates and therefore also mortgage rates. However, this process is slow and dependent on developments on the global financial markets. In the short term, the relief for buyers will therefore remain limited.

At the same time, the effect of the interest rate cuts on residential construction is double-edged. While cheaper loans could boost demand, supply remains limited by the aforementioned regulatory and cost challenges. Additional measures are therefore needed to solve the market's structural problems.

Freedom Cities: a visionary solution?

The "Freedom Cities" represent an innovative approach to tackling the construction crisis. Donald Trump is proposing to create ten new cities that will revolutionize housing construction through deregulation and innovative approaches. The focus is on reducing bureaucracy, speeding up approval processes and using modern technologies.

These planned cities could be built in less densely populated regions in particular, where land and infrastructure are available. One example is the Presidio National Park near San Francisco, which could be developed for 120,000 new residents. Not only residential areas could be created here, but also commercial and innovation centers that create jobs and stimulate the economy.

The "Freedom Cities" could also be a testing ground for new technologies in the construction industry, such as the use of 3D printing, prefabricated building elements or sustainable building materials. In the long term, these innovations could help to reduce costs in residential construction and increase efficiency.

The big construction companies: Winners of the construction crisis?

The US construction industry is dominated by a few large companies that specialize in different segments. D.R. Horton, Lennar Corporation, PulteGroup and Toll Brothers are among the biggest players and could benefit from developments in the housing market.

$LEN (+0,32 %)
The all-rounder

Lennar Corporation pursues a differentiated strategy that encompasses both affordable housing and upscale real estate. The company places great emphasis on sustainability and modern construction concepts, which could make it an important player in the Freedom Cities. Lennar is particularly strong in regions with mixed-use projects - from residential areas to commercial real estate.

$PHM (-1,37 %) The flexible provider

PulteGroup offers a wide range of residential solutions, from single-family homes to condominiums. This flexibility allows the company to respond to different market segments and economic conditions. Especially in regions with growing demand for affordable housing, PulteGroup could play an important role.

$TOL (-1,46 %) The luxury specialist

Toll Brothers specializes in high-quality properties in premium locations. The company serves an affluent target group and could particularly benefit from exclusive projects in the Freedom Cities. Despite the general construction crisis, demand for luxury real estate remains stable in certain markets.

$DHI (-1,25 %)
Market leader in affordable housing

D.R. Horton, the undisputed leader in U.S. homebuilding, has carved out a central position in the industry with its specialization in affordable homes and impressive construction output. And that could be the big advantage here.

The company's projects address one of the country's biggest challenges: the severe shortage of affordable housing. In the 2024 financial year, D.R. Horton completed 89,690 homes, an increase of 8 % on the previous year. Ur for comparison. Vonovia, Europe's largest housing company, has 550,000 apartments in its portfolio. Dr. Horten is building that up in less than 7 years. With a turnover of USD 36.8 billion and a return on equity (ROE) of 19.9 %, the company is one of the most profitable players in the industry.

Focus on affordable homes - a clear competitive advantage

One of the key secrets of D.R. Horton's success is its focus on affordable housing solutions. 69% of the homes sold are in a price segment below USD 400,000. This is an invaluable advantage, especially in a market where access to property is made difficult for many Americans by high mortgage rates and high construction costs. The company's target audience is primarily first-time buyers and middle-income families - precisely those segments of the population that have been particularly affected by the construction crisis.

The affordable prices are the result of high cost efficiency: D.R. Horton relies on standardized construction processes, extensive use of prefabricated components and optimized logistics. This efficiency enables the company to remain competitive even in a challenging market environment.

Broad market presence and economies of scale

With a presence in 125 markets and 36 states, D.R. Horton is not only broadly positioned geographically, but can also take advantage of regional growth opportunities in a targeted manner. The company plays a particularly important role in the high-growth regions of the Sunbelt, where demand for affordable housing is especially high. Thanks to its extensive market presence, D.R. Horton achieves economies of scale that enable the company to implement projects faster and more cost-effectively than many of its competitors.

The strategic focus on regions with high demand and strong population growth ensures that D.R. Horton will continue to benefit from favorable demographic trends in the future. Increasing urbanization in the Sunbelt states and the ongoing migration to these regions offer the company long-term growth opportunities.

Adaptation
to
the
difficult
interest rate environment

Despite the persistently high level of interest rates, D.R. Horton has proven that it can react flexibly to changes in the market. With innovative financing models, including mortgage subsidies and interest rate incentives, the company creates additional incentives for buyers to purchase a home. These measures help to stabilize demand even in a difficult economic environment.

In addition, D.R. Horton is increasingly building smaller, more affordable homes to further lower the barrier to entry for buyers. This adaptability shows that the company is able to respond quickly and effectively to market challenges - a crucial factor for long-term success.

Key role
in
visionary
projects?

D.R. Horton is not only in a position to master existing market challenges, but also to play a leading role in visionary projects such as the "Freedom Cities" proposed by Donald Trump. These planned cities, which aim to create affordable housing through deregulation and innovative construction approaches, offer enormous growth opportunities. With its experience in building large-scale residential projects and its ability to work cost-effectively, D.R. Horton is predestined to become a key player in such developments.

In addition, the company is investing in new technologies, such as the use of 3D printing in construction or prefabricated modules, which can further increase efficiency. In the long term, such innovations could help to further reduce construction costs and set new standards in the industry.

Financial stability and shareholder friendliness

D.R. Horton not only impresses operationally, but also with its strong financial position. The company has net liquidity of USD 7.6 billion and keeps its debt ratio at a very low level of 18.9%. This financial strength enables D.R. Horton to react flexibly to market developments and make targeted investments in growth projects.

The company is also attractive for shareholders: the dividend was increased by 33% to USD 0.40 per share in the 2024 financial year. In addition, D.R. Horton plans to carry out share buybacks worth USD 2.4 billion in the coming year. These measures show that the company is not only profitable, but is also committed to sustainable long-term value growth for its investors.

A
pioneer
in
in the
industry

With its clear focus on affordable housing, broad market presence and ability to respond flexibly to economic challenges, D.R. Horton is well positioned to benefit from the current construction crisis and future developments. The company proves that it not only recognizes the problems of the market, but also offers innovative solutions to overcome them.

For investors betting on long-term trends such as the ongoing housing shortage and stabilizing interest rates, D.R. Horton is a promising choice. The combination of operational excellence, financial strength and innovation makes the company one of the most exciting investments in the real estate sector

Given the continued stability of real estate prices and expected demand driven by factors such as urbanization and immigration (at least in the US), I see several sectors and companies benefiting from this trend:

REITs, $DHI (-1,25 %) , $LEN (+0,32 %) , $HD (-1,47 %) , $LOW (-1,93 %) , $CAT (-2,48 %)

However, there has already been a good boost in the current YTD.

• Do you think there is still potential here?

• Or is everything else already priced in?

Have a nice Sunday everyone!