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Trump's Import Tariffs: ETF & Stocks in Focus

Sanghamitra Saha
Asbury Automotive (ABG) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.

As a part of its protectionist agenda, U.S.president Donald Trump levied tariffs on imported solar panels and washing machines. The government will now impose new duties of as much as 30% on foreign-made solar equipment, as reported by the U.S. Trade Representative’s office on Jan 22, 2018. The President also seeks to slap tariffs starting as high as 50% on imported washing machines, according to USTR.

Trump’s motto is to "buy American and hire American." Trump is highly expected to bring U.S. manufacturing jobs back to the country. “The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers and businesses in this regard,” U.S. Trade Representative Robert Lighthizer said in a statement, as quoted on Reuters.

Also according to Reuters, the solar tariffs are lower than the 35% of what the U.S. International Trade Commission (ITC) suggested in October having noticed that imported panels were threatening American manufacturers. The commission was notified of this issue by a “Suniva Inc., a bankrupt U.S. panel maker that sought duties on solar cells and panels.”

Same was the case for washing machines, as there was a complaint by Whirlpool Corp. WHR, which held Samsung Electronics Co. and LG Electronics Inc. responsible for its sufferings as the duo is said to sell washing machines in the United States below fair-market value.

In any case, the Trump era has flared up uncertainties in the alternative energy industry. He is far from supporting the renewable sector and adding incentives to the space. Taking a completely difference stance from President Obama, Trump is ready to push for more fossil fuel generation, be it from crude oil, natural gas or coal (read: Welcome Trump Era with These ETFs).

Against this backdrop, investors may be interested in knowing what might be in the store for the following stocks and ETFs.

Solar

Trump’s non-supportive nature toward the solar industry raised concerns about the future of clean ETFs like First Trust NASDAQ Clean Edge Green Energy Index Fund QCLN and Guggenheim Solar ETF TAN.

However, as per an article published on barrons.com, “Arizona–based solar-panel maker First Solar FSLR is likely to benefit from the decision, because its solar panels are made with a unique process that is exempted from the tariffs.”

But solar firms like Sunrun RUN that develops, owns, manages and sells residential solar energy systems may have to pay more for imported solar cells. This is likely eat up some of its profits. But since, Sunrun shares were also up after hours, Barron’s.com analyst believes that “investors are relieved by the relatively low tariffs.”

Small Caps

Since small caps generate most of their revenues from the domestic market, these are more closely tied to the U.S. economy and its increased hiring. This will make small-cap ETFs like iShares Russell 2000 IWM winners (read: Why Small Cap ETFs are Betting Big on Trump?).

Small-Cap Manufacturing Stocks & ETFs

Also, with Trump highly expected to promote U.S. hiring in the industrial sector, First Trust RBA American Industrial Renaissance ETF AIRR, which focuses on small and mid-cap U.S. industrial and community banking companies, is expected to benefit (read: Industrial ETFs at All-Time Highs: Any Value Left for 2018?).

Washing Machine Companies

As per statista.com, Whirlpool dominated the U.S. washing machine consumer market with about 29% share followed by General Electric Company GE which owns about 14% of market share. If these import duties make Samsung and LG products costlier, many consumers may shift to WHR and GE. This in turn may result in higher sales of WHR and GE washing machines.

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Whirlpool Corporation (WHR) : Free Stock Analysis Report
 
General Electric Company (GE) : Free Stock Analysis Report
 
ISHARS-R 2000 (IWM): ETF Research Reports
 
GUGG-SOLAR (TAN): ETF Research Reports
 
NASDAQ-CL EDG G (QCLN): ETF Research Reports
 
FT-RBA AMER IND (AIRR): ETF Research Reports
 
First Solar, Inc. (FSLR) : Free Stock Analysis Report
 
Sunrun Inc. (RUN) : Free Stock Analysis Report
 
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