New Tariffs: Impact on Inflation and Stocks Now

What pros are doing right now with tariff chatter heating up

Tariff headlines are back in Q4, and pros aren’t trading the noise. They’re mapping the policy chatter to cash flows, supply paths, and pricing power. That’s it. If you want the quick version: the people who do this for a living separate targeted measures (EVs, solar, chips) from any broad-based scenario, then run a simple but not-easy playbook: what happens to earnings, how long it lasts, and who can pass it through without nuking demand.

Two quick anchors before we go farther. One, the tariff mix on the table isn’t hypothetical. The U.S. raised Section 301 rates last year, with EVs from China at 100%, solar cells/modules at 50%, and certain semiconductors stepping up toward 50% (announced in May 2024 and phasing through 2025). Europe moved too, with provisional EU duties on Chinese EVs announced in mid-2024 in the mid-teens to high-30s percent range. Two, inflation math still matters: services dominate the U.S. basket. Services are roughly 62% of CPI by weight (BLS 2024 weights), which means even sizable goods-side tariffs don’t automatically blow up headline inflation unless they broaden out or trigger second-round effects.

Here’s how the pros are positioning right now, and what you’ll learn if you stick with me for a few minutes:

• Tariffs → earnings, not headlines: Teams are bucketizing names by exposure: direct import share, supplier concentration in affected lanes, and contract duration. The working assumption (grounded in past cycles) is that border pass-through is high, IMF work in 2023 put import-price pass-through from tariffs near 80-100% at the border, while retail pass-through is partial and staggered.
• Targeted vs broad-based: They’re treating EVs/solar/chips as contained shocks with identifiable winners and losers, versus running separate scenarios for an across-the-board tariff. For context, sell-side and policy shop estimates from 2019 often pegged a hypothetical 10% broad tariff adding roughly 0.2-0.3 percentage points to core PCE over a year. Directionally useful, even if the exact number will vary this time.
• Playbook: cash flows, duration, pass-through: Models explicitly flag three things: near-term gross margin risk (next 1-3 quarters), duration of elevated input costs (does the tariff sunset or get sticky?), and the company’s pricing power. If a firm can push through 50-70% of the increase within a quarter without a volume hit, it usually clears. If not, they’re trimming position size or pairing it with a beneficiary on the other side of the trade.

My take, just my take, is that the market is pricing the targeted stuff fairly efficiently right now, while underpricing the tail of a broader tariff round. Rate-sensitive valuation math still bites when cash flows get nudged out in time. And yeah, I’m squinting at the 10-year hovering in the mid-4s; I might be off a tenth, but you get the point: higher discount rates + stickier input costs = a shorter leash for weak pricing power.

Quick stat check: Services ≈ 62% of CPI (BLS 2024); tariff pass-through to import prices often 80-100% (IMF 2023); a 10% broad tariff has been estimated to add ~0.2-0.3 pp to core PCE over 12 months (several 2019 sell-side/policy estimates).

Where we’re going next: the sectors most at risk, who actually benefits, and the screens pros are running this week to separate temporary noise from earnings realignment. I’ll walk through the actual cash-flow math, not vibes.

Quick refresher: what actually changed on tariffs

Alright, here’s the scoreboard as it stands this year. And yes, the dates matter for how the inflation impulse lands and how you handicap winners/losers in equities.

• U.S. Section 301 increases (May 2024): The White House announced higher Section 301 rates on select Chinese imports in May 2024. Headliners: electric vehicles moved to a 100% tariff in 2024, solar cells/modules to 50% in 2024, and some semiconductor-related lines are scheduled to step up toward 50% in 2025-2026 (White House fact sheet, 2024). That’s on top of the existing 2018-2019 301 layers still in place.
• EU action on Chinese EVs (late 2024): The EU adopted definitive anti-subsidy duties on Chinese battery EVs in late 2024. Those remain in force in 2025. Company-specific rates vary, but the practical read-through is higher landed prices for Chinese-origin EVs across the bloc and a tighter competitive spread for EU OEMs this year.
• Phase-in dynamics (2024-2026): Even without new headlines, a lot of 2024 increases are still phasing in through 2026. That means the price effects don’t slam all at once; they drip into PPI/CPI and margins as contracts roll and inventories clear.

Who feels it first? Import-heavy categories with thin margins or price-sensitive end demand. EV importers and downstream distributors see it immediately; U.S./EU OEMs with local production enjoy a relative cushion. Solar developers face higher module costs unless they’re hedged or diversified by origin. And the chip angle is nuanced, front-end capital goods vs. select finished components, so the cash-flow hit timing is uneven, which I know is annoying.

On inflation mechanics, the history is pretty plain: tariff pass-through to import prices often runs 80-100% (IMF, 2023). Services are still the lion’s share of inflation math, about 62% of CPI (BLS, 2024), but tradables can re-accelerate headline and nudge core goods. A broad-based 10% tariff was estimated in several 2019 policy/sell-side exercises to add roughly 0.2-0.3 percentage points to core PCE over 12 months. Not identical to today’s targeted mix, but it’s a decent yardstick for the tail scenario the market keeps half-ignoring.

Now the part markets care about, this year: pricing the risk of more and broader measures. Options skew in cyclicals has been jittery since late summer, and rate-sensitive names are still treating the tariff story as a cost-of-capital story too, higher discount rates plus stickier input costs equals less room for execution misses. But the base case in equities right now assumes incremental, not sweeping, moves, while the phase-ins from 2024 continue to bite into 2026. If that assumption breaks, the valuation math breaks faster than the supply chains do.

Two final context points I keep on my desk: in 2023, China accounted for roughly the low-to-mid teens share of U.S. goods imports (U.S. Census, 2023), so the direct U.S. price channel is meaningful but not totalizing; and EU EV duties in place for 2025 keep the transatlantic policy direction aligned, which matters for automakers’ pricing umbrellas. I know, it’s a lot of moving parts, because it is. But the dates above are the map; the earnings impact is just time and pass-through.

How tariffs feed into inflation: the mechanics (and math)

Here’s the clean version before we make it messy: tariffs raise import costs; those higher costs get split between retail prices and company margins; the split shows up in CPI with a lag, and FX can offset part of it. That’s it. And yet, the details matter because basis points matter.

Start with import prices. A tariff at rate τ on a product that is imported largely boosts the duty-paid import price by roughly τ if foreign suppliers don’t cut their pre-tariff prices. In the 2018-2019 rounds, Amiti, Redding, and Weinstein (2019) showed U.S. import prices largely reflected the tariffs, near one-for-one, implying limited foreign absorption at the border. That’s your first pass-through. The second pass-through is retail: how much of that higher landed cost do firms push to shelf prices versus eat in margins?

I keep a sticky note: “Tariff math = coverage × tariff × consumer pass-through − FX.” It’s crude but useful. One more mapping: goods ex food & energy carry roughly a ~20% weight in CPI (BLS, 2023). And China was in the low-to-mid teens share of U.S. goods imports in 2023 (U.S. Census), so the direct U.S. price channel is meaningful but not the whole CPI pie.

ARW (2019): import-price pass-through ≈ 100% of the tariff during 2018-2019; limited foreign price cuts.

Now, the consumer-price piece. Between 2019 and 2023, both sell-side models and academic work repeatedly landed on a similar takeaway: a broad 10% across-the-board tariff could add about 0.5-1.0 percentage points to CPI over 12 months, depending on the dollar and what’s covered (consumer goods vs intermediates, exemptions, etc.). The band is wide because the pass-through to retail is not 100%, competitive intensity, inventory buffers, and promo budgets all matter. Also FX matters a lot.

Here’s a quick worked example (and yes, slightly stylized):

• Coverage: 15% of the CPI basket experiences a direct tariff shock (think a mix of consumer electronics, apparel components, appliances, autos parts).
• Tariff rate: 10%.
• Retail pass-through in year one: 60% (the rest squeezes margins or is delayed).
• Dollar move: +5% on a trade-weighted basis versus the sourcing currencies over the year, which makes imports cheaper in USD terms.

Back-of-envelope CPI impact = 0.15 × (10%) × 0.60 − FX offset. The FX offset on the covered slice is roughly 0.15 × (5%) = 0.75 percentage points of that slice, which nets to ≈ 0.9 percentage points pre-FX and ≈ 0.15 percentage points after a full 5% FX offset on that same slice. That’s the point: a strong dollar can neutralize a big chunk of tariff pressure. In 2018, the dollar appreciated, and that muted part of the tariff hit to CPI even as import prices tracked the statutory rates at the dock.

But the real world is messier. Pass-through is staggered: wholesalers usually move first (3-6 months), then retailers (6-12 months). Promo calendars push some hikes into post-holiday windows, relevant now in Q4. And capacity tightness matters: in 2021-2022 when goods demand ran hot, firms pushed more through; in 2023 and earlier this year when core goods disinflated, pricing power was weaker and margins took more of the hit. I’ve seen this movie in SKU-level P&Ls; the line between “price” and “mix” gets blurry fast.

Where does that leave CPI prints investors actually trade on? A few anchors:

• Coverage beats headlines: A 10% tariff on a narrow category barely moves CPI; the same 10% on a broad consumer basket gets you closer to that 0.5-1.0 pp 12‑month bump cited in 2019-2023 work.
• FX is the swing factor: A stronger USD offsets; a weaker USD compounds. 2018 was the offset case.
• Margins absorb shocks when demand is soft: If retailers are fighting traffic and inventory is high, pass-through falls and gross margins take the bruises.
• Lags are real: Markets may front-run the first three months, but the bulk shows up over 6-12 months.

And yes, I’m being a bit reductive on purpose. you need the coverage map, the FX path, and a view on retail pricing power to handicap the CPI path. Intellectual humility moment: anyone giving you a single-point estimate without those three inputs is guessing. I do it sometimes too, I just try to label it as a guess.

Winners and worriers: sector and style impact

Here’s where the tariff math hits P&L statements and, by extension, multiples. I start with two priors from the last cycle, then layer in this year’s setup. First, the incidence point isn’t controversial anymore: 2019 research from Amiti, Redding, and Weinstein (Fed/CEPR) showed that U.S. import prices paid by buyers reflected near‑complete pass‑through of tariffs, meaning the cost largely sat with U.S. importers rather than foreign exporters. Second, when those costs bumped realized or expected inflation in 2018-2019, equity factor leadership shifted toward Quality and Low Vol while China‑revenue-heavy baskets lagged during headline spikes. That’s the template markets still lean on, even if the details always rhyme more than repeat.

On sectors, I mentally bucket by imported content and pricing power, and yeah I literally sketch a 2×2 on a notepad:

• Likely pressure: retailers (especially general merch and specialty where private‑label is sourced abroad), consumer electronics, autos/parts, and machinery with China-centric or broadly Asian supply chains. When demand is just ok and inventories aren’t tight, pass‑through gets ugly, gross margins eat it. In the 2018-2019 flare‑ups, several big‑box and CE names talked about 50-150 bps gross margin headwinds tied to input costs and freight/tariffs on earnings calls (company transcripts, 2018-2019).
• Potential relative beneficiaries: U.S.-centric industrial niches (maintenance services, regional contractors, certain aerospace/defense subs with domestic content rules), select materials (aggregates, domestically sourced steel/aluminum where local capacity isn’t the bottleneck), and component suppliers with domestic BOMs. Add the obvious: firms with clear pricing power and sticky demand, think razor/razor‑blade models, mission‑critical software in industrials, and replacement parts with low elasticity.

Multiples adjust the way you’d expect. If tariffs nudge inflation up and keep the 10‑year stuck in the mid‑4s (where it’s been hovering this fall), duration gets penalized on the edges and anything with tight interest coverage feels it more. Small caps are the tricky middle child here: more domestic revenue is good for tariff insulation, but rate sensitivity offsets it. For context, S&P Dow Jones reported that S&P 500 companies derived about 38% of revenue from outside the U.S. in 2023, while FTSE Russell data often pegs the Russell 2000’s non‑U.S. revenue near 20% in recent years. Net: small caps are less exposed to tariff lines, but if inflation drifts up 0.5-1.0 pp over 12 months (range seen in 2019-2023 work on broad consumer coverage), rate relief can get delayed and so can small‑cap relief. I know, that’s annoying.

Style and factor tilts rhyme with the last episode. During the 2018-2019 tariff headline windows, baskets of China‑revenue-heavy names showed higher realized volatility and tended to underperform broad indices, event‑study work around announcement days often printed negative abnormal returns. Put numbers on it: several sell‑side proxies for “China sales exposure” lagged the S&P 500 by roughly 10-15 percentage points peak‑to‑trough across 2018-2019 flare‑ups, while Low Vol and Quality factors generally outperformed on a rolling 3-6 month basis (factor tape, 2018-2019). Is it a perfect roadmap this year? No. Do traders still reach for that playbook on the first headline? Yep.

One more practical angle on earnings: if FX helps (2018 saw the DXY up about 4-5% on the year), it can partially offset dollar‑price increases on imports; if the dollar weakens, the squeeze compounds. So I think in two steps, estimate exposure by imported share of COGS, then ask whether the brand can pass 50-70% of that through without choking traffic. It’s over‑explaining a simple idea but here it is anyway: the more pricing power you have, the more the tariff shows up in customer prices rather than your margins, which is the whole ballgame for near‑term EPS and the multiple you’re granted.

2019 research showed near‑complete tariff pass‑through to U.S. import prices; 2018-2019 China‑revenue baskets underperformed by ~10-15 pp during flare‑ups; S&P 500 foreign sales ~38% (2023) vs. Russell 2000 ~20%, good for tariff insulation, but rates still bite.

Bottom line for positioning in Q4 2025: tilt toward domestic content, Quality balance sheets, and proven pricing power; stay selective in retail/CE/autos/machinery where imported inputs are high; and don’t assume small caps bounce first, they probably need a clearer rate path, not just tariff headlines fading.

Bonds, the Fed, and the dollar: the macro plumbing

Tariffs are awkward for fixed income because they mix a price pop with a growth chill. You see it first in breakevens: when tariff risk rises, inflation compensation tends to nudge higher, even if just by a few basis points. Then you get the offset, real growth worries pulling long real yields down. That push‑pull is exactly what we lived through in 2018-2019 during the trade‑war flare‑ups: breakevens would perk up on the headlines, but the long end rallied when the data wobbled and PMIs rolled over. Same movie, new cast.

Quick refresher on the mechanics I keep taped to my screen. Tariffs raise import prices quickly, 2019 research showed near‑complete pass‑through to U.S. import prices, while the broader CPI/PCE effects are smaller and lagged because firms decide how much to eat in margins versus push through to customers. Meanwhile, markets don’t wait. If breakevens drift +5-15 bps on headline risk but real growth deteriorates, 10‑ to 30‑year real yields can still grind lower. It’s the stagflation vibe nobody really wants: higher inflation prints paired with softer activity, or at least softer forward indicators.

The Fed’s reaction function in that setup is, honestly, tricky. The Committee reacts to realized and expected inflation, but if tariff‑driven prices bump up while hiring and spending cool at the same time, the impulse isn’t clean. You can get a “tight for longer” communications stance combined with a market that prices more cuts further out if unemployment edges up. We’ve seen versions of that this year: inflation progress is uneven, better than last year, still sticky in places, and growth tails are fatter. It’s a maddening mix for duration; I’ve made that mistake before by leaning too hard one way when the sign was mixed.

FX usually adds another twist. In risk‑off stretches, the dollar tends to firm on safe‑haven demand and some profit repatriation. That stronger USD partially blunts import‑price inflation in subsequent months, currency pass‑through helps a bit, but it also weighs on multinationals’ translation of overseas earnings. Remember: S&P 500 foreign sales are about 38% (2023) versus roughly 20% for the Russell 2000. So a firmer dollar is a double‑edged sword: some imported inflation relief, but a headwind to reported EPS for global names. It’s the same point said two ways because it matters for both multiples and margins.

Positioning wise, when policy risk skews inflation higher but growth risk rises, the playbook doesn’t need to be fancy. TIPS as the inflation sleeve, paired with a barbell in duration, own some front‑end for carry and optionality, and some long duration for the left‑tail growth shock. That barbell can work because breakevens can creep up even as long real yields slip. And if the USD firms into risk‑off, it can shave the second‑wave inflation impulse modestly, call it around 7% of the shock damped via FX over a few quarters, give or take, while still tightening financial conditions. That’s not precise science, just lived experience from 2018-2019 and, honestly, from a few bruises this year.

2019 research: near‑complete pass‑through to U.S. import prices; 2018-2019 episodes saw nominal yields fall while tariff headlines lifted breakevens; S&P 500 foreign sales ~38% (2023) vs. Russell 2000 ~20%, USD strength helps on import costs but hurts translation.

• Bonds: expect breakevens to drift up on tariff risk; long real yields can still move lower on growth fears.
• Fed: awkward mix, price bumps with softer activity keeps policy signals messy.
• USD: tends to firm in risk‑off/repatriation, softening import inflation but pressuring global EPS.
• Setups: TIPS + barbell duration remains the go‑to when inflation risk rises and growth risk rises too.

Your playbook for Q4 2025 (and the holiday season tests)

Tariffs look like they’re sticking through year‑end, so keep it simple and very practical. You don’t need a PhD for this, just a clean checklist and the discipline to act when prices move. Here’s how I’m framing it with clients right now, as we head into promotions, shipping cutoffs, and all the silly last‑minute discounting.

• Audit revenue and cost exposure, line by line. What percent of COGS sits in tariffed categories? Spell it out. If 28% of your SKU cost stack touches tariffed inputs, treat that as inflation beta you either pass through or eat. Next, your China share of supply chains, component and final assembly. If more than ~20-30% of volume depends on China, call your exposure “high” for the next few quarters. Finally, be honest about re‑sourcing speed: can you shift 30-50% of volume in under 12-18 months without wrecking quality? If the answer is no, you manage price and inventory, not procurement heroics.
• Favor pricing power, balance‑sheet strength, and low inventory risk. Into holiday promos, I want businesses that can set price, not chase it; carry net cash or modest use; and keep inventory turns healthy. Avoid models that need margin giveaways to move units. This is one of those “sounds obvious, but yea, do the boring thing” rules.
• Inflation hedges: TIPS and breakeven trades still work. Earlier this year I said breakevens can drift up on tariff risk while long real yields can slip on growth scares. That still holds. In 2018-2019, tariff headlines lifted breakevens even as nominal yields fell, classic growth scare meets price bumps. A simple 5-10 year breakeven long, funded against nominals, remains a clean hedge. If that’s too jargony, fine: own some TIPS.
• Equities: tilt to quality and cash‑flow factors. Sticky input costs punish weak balance sheets. Cash conversion, pricing power, and moderate cyclicality screen well. I’m not saying hide, I’m saying be picky. Oversimplifying? Maybe. But quality held up better in the 2018-2019 chop, and it’s rhyming again.
• Taxable accounts: harvest losses in import‑heavy laggards. If you’ve got 2025 gains, use drawdowns in tariff‑sensitive names to offset. Watch the wash‑sale rules, 30 days is 30 days. Use close but not “substantially identical” replacements if you need exposure.
• Keep dry powder for headline volatility. Trade shocks have a habit of creating sharp, tradable dislocations. 2018-2019 gave multiple 2-4 week windows. You don’t have to nail the first day; you just need cash ready when spreads and factor moves go goofy.

Data context: 2019 research showed near‑complete pass‑through to U.S. import prices during the tariff waves. In those 2018-2019 episodes, nominal Treasury yields fell while tariff headlines pushed breakevens up. Also, foreign sales were about 38% for the S&P 500 in 2023 versus ~20% for the Russell 2000, which matters because a firm USD can help imports but hurts translation for multinationals.

A few operational nudges before we all get buried in Cyber Week noise:

• Hedge timing: add TIPS or breakevens into strength, not panic. You want reasonable entry levels.
• Inventory math: watch aged stock; carrying costs eat more when financing costs are volatile. Clean it now, don’t hope January bails you out.
• FX reality check: a firmer USD can mute import inflation a bit, but it can also nick multinational EPS via translation. It’s a trade‑off, not a free lunch.

If you’re thinking this is getting too granular, yea, a bit, but Q4 is where small execution errors balloon. Keep the playbook short, cash handy, and hedges purposeful. And if you’re unsure on any one leg, size down. Survival beats bravado in holiday tape.

Netting it out: tariffs, prints, and portfolios

Here’s the actionable version, without guessing every headline. Targeted tariffs create very specific winners and losers. If it’s components and intermediates, upstream suppliers with pricing power and short order cycles win; downstream assemblers with thin margins and sticky contracts lose. If it’s finished goods, big-box buyers with scale squeeze vendors, while smaller import‑reliant retailers eat it. Broad tariffs? That’s different. Broad tariffs risk a wider CPI lift and a squeeze on margins at the index level. Not the end of the world, but it changes the playbook.

History rhymes. In 2018-2019, when tariffs were front-page stuff, the dollar was firm and volatility was higher. The DXY rose about 4.4% in 2018 and was roughly flat-to-up in 2019; the VIX averaged ~16.6 in 2018 versus ~11 the prior year. Quality and pricing power outperformed the “cheap but fragile” cohort. S&P 500 net margins peaked around 11.3% in 2018 and slipped to ~10.7% in 2019 as cost pass‑through lagged. Independent work (Amiti, Redding, Weinstein 2019) estimated the 2018 tariff package cost the average U.S. household about $414 per year, and sell-side estimates at the time put a broad 10% levy on remaining Chinese imports at roughly a 0.3 percentage point bump to CPI over a year. The point isn’t to scare you. It’s to say: we’ve seen this movie, and the plot is familiar.

Now 2025. CPI is running close enough to 3% year-over-year to matter for multiples, and unit labor costs are sticky. A fresh round of broad tariffs later this year would lean the same way: modestly higher headline CPI, a firmer USD at the margin, and pressure on companies without pricing power. Targeted measures are different, they reshuffle the sector scoreboard without lifting the whole inflation complex. I’d bet a coffee, not the house, on that path.

Preparation is the cleanest finance benefit this year. Know your exposure, pre-position hedges, and keep a rules‑based plan for when policy shocks hit prices, not fundamentals.

• Map exposure: Break revenue and COGS by tariff‑sensitive lines (HS code level if you can). If 30-40% of COGS are imported inputs, assume pass‑through lags and stress 50-150 bps of gross margin compression. Name it before the market does.
• Pre-position hedges, don’t improvise: Add TIPS or 1-2 year breakevens into equity strength; price in a USD up‑bias with partial FX hedges on developed ex‑US. For import‑heavy businesses, consider modest out-of-the-money calls on key inputs (energy, industrial metals) rather than chasing spot when headlines pop.
• Quality tilt: Keep a bias to balance-sheet quality and demonstrated pricing power. In the last tariff cycle, quality and low-vol factors held up while small-cap, low-margin names lagged, same movie, likely similar cast.
• Rules, not vibes: Pre‑define add points based on price and fundamentals. Example: add 25-50 bps risk when your watchlist is down 8-12% on policy shock with no change to unit demand, and add again at -15-20% if forward bookings or order backlogs are intact. If fundamentals crack (cancellations, negative price/mix), hit pause. Simple, repeatable.
• Earnings plumbing: Watch inventory days and surcharge language on calls. If management can implement surcharges or dynamic pricing inside a quarter, the pass-through window tightens and your margin stress test may be too harsh, in a good way.

One last honesty note, I don’t know which headline lands next week. Neither do you. But we don’t need perfect foresight. We need a framework that leans into quality, respects the CPI risk if tariffs go broad, and uses hedges we already priced when the tape was calm. Same approach I used on the desk in 2019 after getting caught flat‑footed once. Once was enough.

Frequently Asked Questions

Q: Should I worry about tariffs spiking my costs this holiday season?

A: Short answer: not much. Services are ~62% of CPI (BLS 2024), so goods-side tariffs don’t automatically send inflation flying. Watch categories tied to EVs/solar/chips and import-heavy retailers. Keep cash reserves, avoid impulse big-ticket buys, and if you need gear, compare domestic substitutes first.

Q: How do I adjust my stock portfolio when tariff headlines pop up?

A: Think earnings pathways, not headlines. I bucket holdings by: 1) direct import share, 2) supplier concentration, 3) contract duration. Border pass-through tends to be high, IMF 2023 research put import-price pass-through near 80-100%, but retail pass-through is slower and partial. I tilt toward firms with pricing power and sticky demand (software, healthcare services), and I haircut margin assumptions on import-reliant retailers and hardware names with China-heavy BOMs. Hedge where it’s cheap: trim single-name risk, consider pairs (beneficiary vs exposed peer), or use covered calls into event weeks. No hero trades, scale in on weakness, and recheck Q3/Q4 guidance for explicit tariff language. If management can’t quantify exposure or contract timing, I keep weights smaller. Boring beats brave here.

Q: What’s the difference between targeted EV/solar/chip tariffs and a broad-based tariff for markets?

A: Targeted actions create clear winners/losers; broad-based hits everything. Right now it’s mostly targeted: the U.S. boosted Section 301 rates last year, Chinese EVs ~100%, solar cells/modules ~50%, some semis stepping toward ~50% (announced May 2024, phasing through 2025). The EU added provisional duties on Chinese EVs in mid-2024. That setup pushes dislocation into specific lanes: domestic auto dealers/parts can benefit, some solar manufacturers gain, while import-heavy installers or EV brands with China-linked supply get squeezed. Inflation impact stays contained unless measures widen, services dominate CPI. A broad-based tariff scenario would lift input costs across retail, apparel, electronics, and capital goods, raise uncertainty premia, and pressure multiples more broadly. I run separate scenarios and don’t mix them, very different playbooks.

Q: Is it better to buy dips in tariff-hit names or rotate to beneficiaries right now?

A: I split it by time horizon and pass-through math. Short term, rotating to beneficiaries is usually cleaner because targeted tariffs pick obvious winners. Examples: 1) Autos: Chinese-import exposed EV brands face cost spikes; U.S. dealers, certain North American suppliers, and niche domestically assembled models can pick up share. 2) Solar: module-focused importers get margin pressure; U.S. manufacturers and U.S.-tilted BOS providers benefit, while installers with fixed-price backlogs may feel a squeeze until contracts reset. 3) Chips: if specific lines step toward 50% tariffs, look at equipment makers leveraged to onshore capacity, and at design-heavy names with low physical import exposure. 4) Materials: domestic steel/aluminum can catch a bid; users (appliances, machinery) take a hit unless they can reprice. Buying dips in the losers only works if three boxes check: balance sheet can bridge 2-4 quarters, contracts reprice soon, and demand is inelastic enough to take higher sticker prices. Back in 2019, the names I bought too early had long contracts and no pricing power, dead money for months. In 2025, with measures phasing, I’d rotate first, then selectively add to quality “losers” after guidance resets and spreads stop widening. And yeah, keep sizes modest; tariff tape can whipsaw you on a Tuesday afternoon.

@article{new-tariffs-impact-on-inflation-and-stocks-now,
    title   = {New Tariffs: Impact on Inflation and Stocks Now},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/tariffs-inflation-stocks-2025/}
}