The "Losers" of Trump's Trade War

By Matthew Milner, on Wednesday, October 17, 2018

Want to make money from Trump’s trade war?

It’s easy to do… you just need to separate the “winners” from the “losers.”

You see, Trump’s new tariffs will impact a huge number of companies and industries. Some will benefit, but others will get crushed.

If you’re looking to profit from this opportunity, step number one is avoiding the losers.

Today I’ll show you how.

Investment Advice, Straight from the Source

As you’ve probably heard, China and the U.S. are locked in a trade war.

The U.S. is placing 25% tariffs on $200 billion worth of Chinese goods, from handbags and dried fruit to aluminum, and China is retaliating in kind.

To learn about the real-world impact of these tariffs — and to figure out how to profit from it — we’ve been listening to the quarterly earnings calls of major U.S. companies.

Here’s what we’ve learned.

Cars Get Caught

There’ll be many losers in the trade war, but one of the biggest is the automotive sector.

Car companies use enormous amounts of steel and aluminum, and those two industries are in the cross hairs of the trade war.

For example, on a recent earnings call, Bob Shanks, the CFO of Ford Motors (NYSE: F), said he sees “unfavorable bottom line effects” due to higher costs for steel and aluminum. Ford CEO Jim Hackett later said tariffs will cost the company $1 billion in 2018 and 2019.

It’s a similar story for Harley Davidson (NYSE: HOG), where CFO John Olin said his raw material costs will increase by $15 million to $20 million this year.

And it’s the same thing for Daimler (OTCMKTS: DMLRY), the manufacturer of Mercedes-Benz. Daimler’s shares recently hit a two-year low after it issued a surprise profit warning to the downside because of trade tensions.

Profits Dry Up for Beverage Companies

Another set of corporate “losers” can be found in the food and beverage industry.

For example, Anthony DiSilvestro, the CFO of Campbell’s Soup (NYSE: CPB), and James Quincey, the CEO of Coca-Cola (NYSE: KO) spoke on recent earnings calls about being hit by tariffs.

As they explained it, the main problem they’re facing is their need for metals for product packaging — the types of metals that have major tariffs on them.

The brewing industry has the same problem. (Some prefer their beer in bottles, but many prefer aluminum cans.) By some estimates, tariffs for brewers would cost the equivalent of about $350 million in new taxes, and could lead to more than 20,000 jobs being lost.

MillerCoors CEO Gavin Hattersley predicted that he’d need to raise prices by about 50 cents per 12-pack of beer to offset the impact of tariffs — and that such an increase could hurt his business and wreck his profits.

Industrials at Risk

Automobile and beverage companies might have it bad…

But any U.S. industrial company with significant exposure to raw material costs is in danger of getting creamed — so you might want to avoid investing in this sector, too.

Potential losers in this category include big names from the Dow Jones Industrial Average like 3M (NYSE: MMM), Caterpillar (NYSE: CAT), and General Electric (NYSE: GE).

Another industrial company at risk is Boeing (NYSE: BA)…

China’s tariffs will put this aerospace giant at a major disadvantage to international competitors like Airbus (OTCMKTS: EADSY), and could restrain sales of its 737 passenger jets.

How about the “Winners”?

Now you know about a few of the biggest potential “losers” to avoid in this trade war.

But there’ll be many “winners” too.

These winners come from all sorts of surprising sectors…

And tomorrow, Wayne will show you the ones with the biggest profit potential.

Happy Investing

Best Regards,
Matthew Milner
Matthew Milner


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