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(Bloomberg) -- US stocks slipped on Friday afternoon to end the day in the red, with carmakers and Chinese companies leading the decline, as the White House said President Donald Trump intends to move ahead with plans on Saturday to impose 25% tariffs on Mexico and Canada and a 10% levy on China.
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A UBS Group AG basket of stocks at risk from the proposed tariffs sank 3.7%, while the S&P 500 Index reversed a gain of as much as 0.8% to close down 0.5%. The Bloomberg Dollar Spot Index jumped to a session high on the news, while the Cboe VIX Index climbed to a little over 16.
The threat of tariffs has loomed large over US equities since Trump won the US presidential election in early November. Investors and strategists have warned that high levies can reignite inflation in the country, and in turn, weigh on stocks.
Here are the stocks and sectors that can react the most to prolonged trade wars and tariffs.
Autos
The US auto industry, with its global supply chain and big exposure to Mexico, Canada and China, stand to be the most impacted. According to Evercore ISI analyst Chris McNally, the three big traditional car companies — General Motors Co., Ford Motor Co., Stellantis NV — and their suppliers will remain volatile given the extreme risk. The analyst added that every 10% Mexico tariff translates to a 20% hit to GM’s earnings per share and a 10% blow to Ford’s.
“Mexico tariffs would be highly disruptive and inflationary to the US auto consumer,” RBC Capital Markets analyst Tom Narayan wrote in a note, adding that auto investors’ sentiment on the Mexico tariff topic has worsened in recent days.
The S&P 500 Auto Parts & Equipment Index can move as auto suppliers’ “product ecosystem is already largely entrenched in Mexico,” and they stand heavily exposed to the risk, Narayan said.
Electric vehicle stocks that can be impacted include Tesla Inc., Rivian Automotive Inc. and Lucid Group Inc., charging network operators such as ChargePoint Holdings Inc., Beam Global, Blink Charging Co.
China-Exposed Stocks
Stocks across sectors with high exposure to China will be most vulnerable, given Trump’s especially tough stance on trade with the Asian nation.
A JPMorgan index of companies with heavy exposure to the country includes Air Products and Chemicals Inc., Celanese Corp., BorgWarner Inc., Otis Worldwide Corp., Agilent Technologies Inc., IPG Photonics Corp. and Jabil Inc. The Nasdaq Golden Dragon China Index, which is comprised of companies that do business in China but trade in the US, can also be volatile. The index dropped 3.5% on Friday, marking its worst day in seven weeks.