Trump Pushing Tariff Policy U.S. manufacturing business is recovering Expected rise in air conditioning and power-related stocks
A week before the inauguration of U.S. President-elect Donald Trump, who declared himself a “tariff man,” U.S. manufacturing-related stocks should be noted, according to a stock market analysis.
“Although U.S. manufacturing indicators are gradually improving, stock prices of manufacturing-related companies have not been reflected properly,” a research team at Hanwha Securities said on the 14th. “If growth stocks take a break, buying will shift to manufacturing-related stocks, which are value stocks.”
Since Trump’s election, the U.S. manufacturing industry has been on the rise. The manufacturing purchasing managers’ index (PMI) in December last year, announced by the US Supply Managers’ Association on the 3rd, was 49.3, far exceeding market forecasts.
Trump plans to boost the collapsed manufacturing economy through the introduction of high-rate universal tariffs. President-elect Trump has stated that he will impose a 60% tariff on Chinese goods and a 10-20% universal tariff on all imports.
In the United States, high tariffs of 20% have never been implemented since the 1930s when the Great Depression occurred.
According to Bloomberg News, Trump is trying to impose universal tariffs even by declaring a national economic emergency.
The reason for such a bold tariff policy is to achieve the conflicting goals of the second Trump administration’s economic revival and fiscal deficit reduction through manufacturing support.
It is predicted that the U.S. economy could revive if major manufacturing companies resume their reshoring to avoid high tariffs.
In fact, exchange-traded funds related to manufacturing and reshoring have soared since Trump’s election. On November 8 last year, when Trump’s election as president was confirmed, the First Trust RBA American Industrial Renaissance ETF (AIRR) rose 8%, and the Theme American Reshoring ETF (RSHO) rose 6%, reaching an all-time high.
With the recent surge in U.S. long-term bond rates slowing down growth stocks that have driven the U.S. stock market, attention is being paid to whether buying will flock to manufacturing-related stocks. If the manufacturing stock market is revived, companies with production automation, robot facilities, or power infrastructure can benefit.
“In 2017 and 2018, when the U.S.-China trade conflict began in earnest, gross profit and operating profit (EBIT) of major manufacturing companies expanded,” said Kang Jae-gu, a researcher at Hanwha Securities. “Investor sentiment in manufacturing-related companies such as air conditioning systems and power devices will be strengthened.”
