Country by Country Investment Guidance as Trump’s Tariffs Take Effect

April 8, 2025

A few days ago, I published a comprehensive report on my analysis of the Trump tariffs. Today, I will provide detailed but general advice to institutional clients.

The Trump ‘America First’ policy regarding international trade will have an enormous impact on the worldwide economy. The 15-18% annualized returns enjoyed for the past five years will likely fall into the 5-8% range in a five-year era I call the Age of Austerity. The decisions you make in this challenging environment will determine the success of your organization and your careers.

This paper covers the world order that the Trump administration is determined to change. It does not cover the United States, other than to list the 15 US companies I selected for the Global Best 50 Companies list.

The following key criteria were used to develop this list:

1. Corporate Fundamentals
2. Wide Economic Moat
3. Dividend Consistency
4. Economic Resiliency

5. Long-Term Outlook
6. Sector Diversity
7. Global Perspective
8. Potential watchlist for my global investment portfolio

For each country, I will list my knowledge of the tariffs, their impact on these countries, and the investment strategies I recommend.  

Canada

(i) Tariffs as we know them today:

• 25% on all goods that do not qualify under USMCA, with a reduced rate of 10% on energy resources.
• The primary concern for Canada revolves around US-imposed tariffs, particularly in sectors heavily integrated with the US economy.
• Specifically, my initial Special Report mentions the auto parts and machinery sectors as highly exposed.  
• There are also concerns about tariffs impacting cross-border oil and gas trade.  
• It’s important to provide context on the history of US-Canada trade relations (e.g., USMCA) and any recent developments in tariff disputes.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• The Canadian economy is highly reliant on exports to the US, making it particularly vulnerable to protectionist measures.
• Economic Impact: Tariffs could reduce export volumes, slow economic growth, and potentially weaken the Canadian dollar.
• Auto Parts & Machinery: Companies like Magna International and Linamar, key suppliers to the US automotive industry, could face decreased demand and margin pressure.  
• Energy Sector: Companies involved in the production and transportation of oil and gas (e.g., Enbridge, Canadian Natural Resources) could be affected by reduced demand due to a global slowdown and tariffs that disrupt cross-border energy flows.  
• Capital Flight: The uncertainty of tariffs could trigger capital flight as investors seek safer or higher-return investments elsewhere.  
• Policy Response: The Canadian government may implement fiscal stimulus measures to support affected industries, which could create both risks and opportunities for investors.  

(iii) Recommended strategies:

• Short-term: Advise a cautious approach to Canadian equities, particularly in sectors highly exposed to US trade.  
• Diversification: Recommend diversifying portfolios to reduce exposure to Canada and increase holdings in other markets or asset classes.
• Hedging: For clients with existing Canadian holdings, consider hedging strategies to mitigate currency risk or sector-specific downturns.
• Long-term: Identify potential opportunities in sectors less sensitive to trade tensions, such as domestic infrastructure and technology.  
• Active Management: Emphasize the importance of active portfolio management in navigating the evolving trade landscape and capitalizing on market volatility.
• Due Diligence: Stress the need for thorough due diligence on individual companies, focusing on their exposure to tariffs, financial strength, and ability to adapt to changing market conditions.
• Monitoring: Closely monitor policy developments and economic data to reassess the outlook for Canada and adjust investment strategies as needed.
• Note: My Global Best 50 Companies list includes Agnico-Eagle Mines (a gold producer), Wheaton Precious Metals (a precious metals royalty and streaming company), Canadian National Railway, and leading energy companies Canadian Natural Resources and Enbridge. Four of these are highly cyclical natural resource companies that will perform well as a US Dollar hedge.

Mexico

(i) Tariffs as we know them today:

• 25% baseline tariff for goods that do not qualify under USMCA.
• Mexico’s economy is deeply intertwined with the US through the United States-Mexico-Canada Agreement (USMCA).
• However, it has faced tariffs, particularly in the automotive sector, due to US concerns about trade imbalances and the origin of auto parts.
• The threat of future tariffs and the renegotiation of trade agreements creates significant uncertainty.  

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Auto Sector: This is a critical sector for Mexico, with companies like General Motors de México, Ford Motor Company de México, and Nissan Mexicana heavily reliant on exports to the US. Tariffs increase costs, squeeze margins, and could lead to production cuts and job losses.  
• Peso Volatility: Uncertainty around trade policy leads to volatility in the Mexican peso, increasing risks for foreign investors and making it more expensive for Mexican companies to borrow in foreign currencies.  
• Nearshoring: Mexico has benefited from the “nearshoring” trend, where companies relocate production closer to the US. Trade tensions weaken this narrative, as companies may look to diversify their production locations further.  
• Economic Growth: Overall, tariff uncertainty and trade barriers can hinder Mexico’s economic growth by reducing investment, exports, and job creation.

(iii) Recommended strategies:

• Defensive Positioning: Recommend a defensive stance on Mexican assets, favoring sectors less exposed to US trade.  
• Currency Hedging: Advise clients to hedge their exposure to the Mexican peso to mitigate currency risk.
• Selective Opportunities: Look for selective opportunities in companies with strong domestic demand or diversifying their export markets.
• Risk Monitoring: Closely monitor US trade policy developments and any signs of a reversal or new regional trade agreements that could benefit Mexico.  
• Long-Term Perspective: Emphasize the importance of a long-term perspective, as short-term volatility may create attractive entry points for investors with a higher risk tolerance.

Brazil

(i) Tariffs as we know them today:

• 10% baseline tariff.
• Brazil’s economy is largely driven by commodity exports, making it sensitive to global trade dynamics.  
• While direct tariffs may not be as significant as for Mexico, the indirect impact of tariffs on global demand for commodities is a concern.
• Key exports include iron ore and soybeans, which can be affected by tariffs that slow down manufacturing and construction activity in other countries.  

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Commodity Prices: A slowdown in global trade and economic growth can lead to lower demand and prices for Brazil’s key commodity exports, negatively impacting its trade balance and GDP.  
• Exporters: Companies like Vale (iron ore) and large soybean producers are vulnerable to lower commodity prices.  
• Currency Depreciation: Lower export revenues can put downward pressure on the Brazilian real, increasing import costs and potentially fueling inflation.  
• Domestic Economy: While export-oriented sectors may suffer, the domestic-focused consumer and fintech sectors could show relative resilience.  

(iii) Recommended strategies:

• Neutral Stance: Recommend a neutral short-term stance on Brazil, given the risks associated with global trade tensions.  
• Selective Opportunities: Advise clients to explore selective long-term opportunities in domestic-focused sectors with growth potential.  
• Currency Considerations: For USD-based investors, the depreciation of the real may create attractive entry points, but be aware of repatriation risks.  
• Commodity Price Monitoring: Monitor global commodity prices and demand trends closely to assess the outlook for Brazil’s export sector.
• Political and Economic Stability: Emphasize the importance of political and economic stability in Brazil, as these factors can significantly influence investor sentiment.

Argentina

(i) Tariffs as we know them today:

• 10% baseline tariff.
• Argentina’s economy has struggled with macroeconomic imbalances, making it particularly vulnerable to external shocks like tariffs.
• Exporters in the agriculture and energy sectors face challenges due to softening demand and retaliatory tariffs.  
• It’s important to provide context on Argentina’s history of debt crises and currency instability, as these factors amplify the impact of trade tensions.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Economic Instability: Tariffs exacerbate Argentina’s economic problems, leading to lower exports, reduced investment, and potentially higher inflation.  
• Default Risk: Increased economic stress raises the risk of Argentina defaulting on its sovereign debt, which can trigger capital flight and further weaken the financial system.  
• Export Sector: Trade barriers reduce demand and lower prices for companies in the agriculture (e.g., soybean producers) and energy sectors.  
• Investor Sentiment: Investor confidence in Argentina will likely decline further, making it more difficult for the country to attract foreign investment.  

(iii) Recommended strategies:

• High-Risk Exposure: Emphasize that Argentina represents a high-risk investment environment due to its economic vulnerabilities and exposure to trade tensions.  
• Selective Approach: Advise clients to consider only deep-value plays with strong USD earnings as a potential hedge against the risks.  
• Currency Risk Management: Closely manage currency risk, as the Argentine peso will likely remain volatile.
• Political Risk Awareness: Monitor political developments in Argentina closely, as policy changes can significantly impact the investment outlook.
• Due Diligence: Conduct rigorous due diligence on any potential investments, focusing on financial stability and resilience to economic shocks.

Chile

(i) Tariffs as we know them today:

• 10% baseline tariff.
• Chile’s economy relies heavily on copper exports, making it sensitive to global demand for industrial metals.  
• Tariffs that reduce global manufacturing output can indirectly hurt Chile by lowering demand for copper.  
• Additionally, Chile has significant trade ties with China, so a slowdown in the Chinese economy due to tariffs can also have negative consequences.  

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Copper Demand: Reduced global manufacturing activity due to tariffs leads to lower demand and prices for copper, impacting Chile’s export revenues and government finances.  
• China Exposure: A slowdown in China, a major consumer of copper, further dampens demand and puts downward pressure on prices.  
• Economic Growth: Lower copper prices and reduced trade activity can slow Chile’s economic growth.  
• Market Liquidity: Thin market liquidity in Chile can amplify volatility and limit institutional investment.  
• Mining Companies: Companies like Codelco, the state-owned copper producer, are directly affected by lower copper prices.

(iii) Recommended strategies:

• Avoidance Recommendation: Advise clients to avoid Chilean assets until there are clearer signs of a bottoming in commodity demand or a significant stimulus effort from China.  
• Commodity Price Monitoring: Closely monitor global commodity demand and copper prices to identify potential turning points.
• China Economic Outlook: Track China’s economic outlook, as it is a key driver of copper demand.
• Long-Term Opportunities: Emphasize that market downturns can create long-term investment opportunities for clients with a higher risk tolerance and a longer investment horizon.  
• Liquidity Awareness: Be aware of the potential for market volatility due to thin liquidity.  

United Kingdom

(i) Tariffs as we know them today:

• 10% tariff.
• The UK’s situation is complicated by Brexit, which adds another layer of uncertainty to its trade relationships.
• GBP strength vs. USD is a factor, but the key tariff considerations involve the UK’s trade relationships with both the US and the EU post-Brexit.
• It’s crucial to specify which sectors face tariffs and how Brexit influences the UK’s ability to respond.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Currency Fluctuations: GBP volatility impacts the competitiveness of UK exports and the profitability of UK companies with international operations.
• Consumer Sector: Domestic staples may outperform exporters. Companies like Tesco and Unilever (though also multinational) have significant domestic revenue.
• Global Financials: London is a major financial center. Due to trade uncertainties, companies like HSBC and Prudential face reduced capital flows, particularly in Asia.
• Export-Oriented Industries: Manufacturing and other export-heavy sectors face challenges due to tariffs and reduced global demand.

(iii) Recommended strategies:

• Currency Hedging: Recommend FX-hedged instruments to mitigate GBP volatility.  
• Domestic Focus: Favor domestically oriented firms in sectors like consumer staples.  
• Caution on Exporters: Be cautious of exporters and global banks due to trade and capital flow risks.  
• Brexit Monitoring: Closely monitor Brexit developments and their impact on the UK’s trade relationships.
• Active Management: Emphasize active portfolio management to navigate the complex UK situation.

(iv) Notes: Diageo and Unilever are two UK companies I selected for the Global Best 50.

France

(i) Tariffs as we know them today:

• As part of the European Union, subject to a 10% tariff and a 20% reciprocal tariff for 30%.
• As part of the EU, France is subject to EU-wide trade policies and any retaliatory tariffs imposed by the EU.
• The paper highlights the impact of tariffs on the luxury goods and aerospace sectors.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Luxury Goods: Companies like LVMH and Kering are vulnerable to tariffs that reduce purchasing power in key markets like China and the US.  
• Aerospace: Airbus faces challenges due to supply chain disruptions and reduced orders as tariffs impact the global economy.
• Government Support: The French government may intervene with support measures for strategic sectors.  
• Economic Slowdown: Tariffs contribute to a general slowdown in global demand, affecting French exports and economic growth.

(iii) Recommended strategies:

• Underweight Recommendation: Consider an underweight position in French equities until there are signs of stabilization in global demand.  
• Luxury Sector Caution: Exercise caution in the luxury goods sector due to tariff sensitivity.
• Government Policy Monitoring: Monitor potential government support measures that could create opportunities.
• Global Demand Assessment: Assess the trajectory of global demand closely to determine the appropriate time to re-enter French equities.

Notes: I selected Air Liquide, L’Oreal, LVMH, and Schneider Electric as four French companies for the Global Best 50.

Germany

(i) Tariffs as we know them today:

• As part of the European Union, subject to a 10% tariff and a 20% reciprocal tariff for 30%.

• As a major exporter, Germany is significantly impacted by tariffs that disrupt global trade flows.
• The automotive sector is particularly vulnerable, given Germany’s reliance on exports to China and the US.  
• Tariffs on steel and other inputs also affect German manufacturing competitiveness.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Auto Sector: Due to tariffs, companies like Volkswagen, BMW, and Daimler face lower demand and profitability.  
• Manufacturing: Germany’s “Mittelstand” (mid-sized manufacturing companies) is hit by higher input costs and reduced export volumes.
• Recession Risk: Negative Bund yields indicate that the German economy is at risk of recession due to trade tensions.  
• Defensive Sectors: Domestic-focused and defensive sectors may outperform in a downturn.

(iii) Recommended strategies:

• Underweight Recommendation: Consider an underweight position in German equities.  
• Avoid Auto and Manufacturing: Avoid or reduce exposure to the auto and manufacturing sectors.
• Focus on Domestic Services: Favor recession-resilient, domestic-service sectors.  
• Yield Focus: In a low-yield environment, consider dividend-yielding stocks.

Notes: Deutsche Telekom and SAP are two German companies I selected for the Global Best 50 list.

Italy

(i) Tariffs as we know them today:

• As part of the European Union, subject to a 10% tariff and a 20% reciprocal tariff for 30%.
• Italy’s economy, while part of the EU, has specific vulnerabilities.
• The banking sector is particularly fragile, and a substantial impact on manufacturing exports will happen.
• Considering how EU-wide tariffs and global trade slowdowns affect Italy is important.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Banking Sector: Italian banks are burdened by non-performing loans (NPLs), and an economic slowdown due to tariffs could increase these NPLs, further weakening the sector.
• Manufacturing: Machinery and textile exports are declining, impacting Italian manufacturers.
• Public Debt: Italy’s high public debt is a concern, and economic weakness could trigger risk-off sentiment in the market.
• SMEs: Small and medium-sized enterprises (SMEs), which are the backbone of the Italian economy, are particularly vulnerable to tariffs’ negative effects.

(iii) Recommended strategies:

• High-Risk Assessment: Emphasize the high-risk nature of investing in Italy due to its economic vulnerabilities.
• Defensive Positioning: Recommend sticking to defensive sectors like utilities or companies with a strong local revenue base.
• Financial Sector Caution: Exercise caution with investments in the Italian banking sector.
• Sovereign Debt Monitoring: Closely monitor developments related to Italy’s sovereign debt.

Spain

(i) Tariffs as we know them today:

• As part of the European Union, subject to a 10% tariff and a 20% reciprocal tariff for 30%.
• Spain’s economy has some buffers against global trade tensions, such as its tourism sector.
• However, it is still exposed through construction and its banks’ exposure to Latin America.
• It’s important to differentiate between the resilient and vulnerable sectors.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Tourism Sector: Spain’s tourism sector can partially offset the negative impact of reduced exports.
• Construction: Rising steel and material costs due to tariffs can negatively affect the construction sector.
• Banking Sector: Regional banks exposed to Latin America face dual pressure from global trade tensions and economic weakness in that region.

(iii) Recommended strategies:

• Neutral to Cautious Stance: Adopt a neutral to cautious stance on Spain, acknowledging both its strengths and weaknesses.
• Selective Opportunities: Consider selective buying opportunities in domestic retail and tourism.
• Banking Sector Monitoring: Closely monitor the performance of Spanish banks, particularly those with Latin American exposure.
• Construction Sector Awareness: Be aware of the potential headwinds facing the construction sector.

Notes:  Although it will encounter tariff-related challenges, Banco Bilbao Vizcaya Argentaria is a Spanish bank I selected for the Global Best 50 Companies list.

Netherlands

(i) Tariffs as we know them today:

• As part of the European Union, subject to a 10% tariff and a 20% reciprocal tariff for 30%.
• The Netherlands is a trading nation, making it susceptible to disruptions in global trade.
• The paper highlights the exposure of multinationals and the tech/semiconductor sector.
• The impact on logistics, particularly through ports like Rotterdam, is a key concern.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Multinationals: Companies like Unilever and Shell face challenges from global cost inflation and reduced demand.
• Tech/Semiconductors: This sector is sensitive to disruptions in US-China trade flows, affecting companies like ASML.
• Logistics: Reduced trade activity leads to lower throughput at major ports like Rotterdam, impacting the logistics sector.

(iii) Recommended strategies:

• Avoid Global Trade: Avoid companies heavily reliant on global trade.
• Favor Niche Sectors: Favor niche sectors with pricing power and less sensitivity to trade tensions.
• Logistics Sector Caution: Be cautious about investments in the logistics sector.
• Diversification: Emphasize the importance of diversification to reduce exposure to trade-related risks.

Notes: ASML Holding and Wolters Kluwer are two Netherlands companies I selected for the Global Best 50 Companies list.

Sweden

(i) Tariffs as we know them today:

• As part of the European Union, subject to a 10% tariff and a 20% reciprocal tariff for 30%.
• Sweden is an export-dependent economy, making it vulnerable to global trade disruptions.  
• While tariffs on steel and aluminum exports to the US have a modest direct impact, potential tariffs on motor vehicles could have a more significant effect.  
• The uncertainty surrounding which countries and goods will face tariffs is a major concern.  

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Export Dependence: Sweden’s reliance on exports makes it susceptible to slowdowns in global demand.  
• Automotive Industry: Tariffs on motor vehicles could significantly impact companies like Volvo and Scania.  
• Indirect Impacts: Swedish companies also face indirect effects through pricing risks and a potential slowdown in global industrial activity.  
• EU Retaliation: The extent to which the EU retaliates with tariffs on US products will influence the impact on the Swedish economy.  
• Reduced Growth and Inflation: The Swedish government anticipates tariffs could reduce growth and increase inflation.  

(iii) Recommended strategies:

• Careful Monitoring: Closely monitor developments in global trade and potential tariffs on Swedish exports, particularly motor vehicles.
• Diversification: Diversify portfolios to reduce exposure to Swedish export-oriented companies.
• Currency Risk Management: Manage currency risk, as exchange rate fluctuations can impact the profitability of Swedish exporters.
• Long-Term Perspective: Consider the long-term implications of trade tensions on the Swedish economy and specific industries.
• Company-Specific Analysis: Conduct a thorough company-specific analysis to assess the resilience of individual companies to trade disruptions.

Switzerland

(i) Tariffs as we know them today:

• The 10% baseline tariff is combined with a 31% reciprocal tariff for a total of 41%. Apparently, 32% was initially stated.
• Switzerland faces particularly high additional tariffs imposed by the US, its second-most important trading partner.  
• Key export sectors such as machinery, watches, and agricultural goods are directly affected.  
• There are concerns about potential tariffs on pharmaceuticals as well.  

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Significant Impact: Switzerland faces a significant impact due to the high tariffs imposed by the US.  
• Vulnerable Sectors: Companies in the machinery, watchmaking (e.g., Rolex, Swatch Group), and agricultural goods sectors are directly affected.  
• Indirect Effects: Smaller Swiss suppliers in the European supply chain, particularly those serving the German automotive industry, could be severely impacted.  
• Increased Costs: Swiss companies face higher costs, which could increase selling prices and reduce competitiveness.  
• Economic Slowdown: The tariffs increase the likelihood of a weaker Swiss economic performance.  

(iii) Recommended strategies:

• High Awareness: Be acutely aware of the significant risks associated with investments in Switzerland due to the high tariffs.
• Sector-Specific Analysis: Conduct a detailed sector-specific analysis to identify the most vulnerable areas.
• Currency Hedging: Manage currency risk, as the Swiss franc can be volatile.
• Long-Term Opportunities: Consider market downturns as opportunities for long-term positions in fundamentally strong companies.  My Global Best 50 Companies list contains outstanding names in all sectors worldwide. Nestlé and Novartis are two Swiss companies I selected for the list.
• Active Management: Employ active portfolio management to navigate the evolving situation and capitalize on potential opportunities.

Australia

(i) Tariffs as we know them today:

• Australia’s economy is heavily influenced by commodity exports, particularly iron ore and coal.
• A global infrastructure slowdown reduces demand for Australian commodities.
• Australia’s trade relationship with China is also a significant factor.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Commodity Demand: A slowdown in global infrastructure projects reduces demand for Australia’s key exports, impacting companies like BHP and Rio Tinto.  
• China Link: Weakening economic growth in China, a major consumer of Australian commodities, further exacerbates this issue.  
• Aussie Dollar: A drop in the Australian dollar can attract foreign investment into domestic firms with less reliance on imports.  
• Banking Sector: The Australian banking sector is relatively stable and less exposed to global trade tensions, potentially acting as a safe haven.  

(iii) Recommended strategies:

• Mixed Outlook: Provide a mixed outlook, acknowledging both the risks and opportunities in the Australian market.  
• Bearish on Mining: Adopt a bearish stance on the mining sector due to concerns about commodity demand and China’s slowdown.  
• Bullish on Local Services: Be bullish on local service sectors that are less dependent on global trade.  
• Currency Considerations: Monitor the Australian dollar and its potential to attract foreign investment.  
• Financial Sector Stability: Highlight the relative stability of the Australian banking sector.  

Notes: I selected three Australian companies for the Global Best 50 Companies list: BHP Group, CSL Limited, and Macquarie Group.

India

(i) Tariffs as we know them today:

• 10% baseline tariff plus 26% reciprocal tariff for a total of 36%..
• India’s economy is relatively resilient due to its strong domestic consumption.  
• However, US tariffs and slower global demand impact export-facing sectors like IT services and pharmaceuticals.  

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Domestic Resilience: India’s large domestic market provides a buffer against global trade tensions.  
• Export-Facing Sectors: Companies in the IT services (e.g., Infosys, Tata Consultancy Services) and pharmaceutical sectors face headwinds due to tariffs and reduced global demand.  
• Rupee Stability: Maintaining rupee stability is crucial to support capital inflows.  
• Infrastructure Focus: India’s focus on infrastructure development can create investment opportunities.  

(iii) Recommended strategies:

• Overweight Recommendation: Consider an overweight position in India due to its domestic growth potential.  
• Focus on Domestic Consumption: Emphasize investments in domestic consumption and infrastructure sectors.  
• Selective IT Investments: Selectively invest in IT companies with strong fundamentals and the ability to adapt to changing global conditions.  
• Currency Monitoring: Closely monitor the stability of the Indian rupee.

Notes: The India companies I selected for the Global Best 50 Companies list are: ICICI Bank and Infosys.

Singapore

(i) Tariffs as we know them today:

• 10% tariff.
• Singapore’s economy relies heavily on trade and logistics, making it vulnerable to global trade disruptions.
• The paper highlights the impact on shipping/logistics and REITs.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Shipping/Logistics: Trade chokepoints in Singapore see reduced volume as global trade contracts.
• REITs: Commercial REITs are under pressure due to potential tenant pullbacks as businesses reassess their global footprint.
• Banking Sector: Trade finance volumes and loan growth slow down significantly, impacting Singapore’s financial sector.

(iii) Recommended strategies:

• Underweight Recommendation: Consider an underweight position in Singapore due to its vulnerability to trade disruptions.
• Avoid Trade-Sensitive Sectors: Avoid sectors heavily reliant on global trade, such as shipping, logistics, and trade finance.
• REIT Caution: Exercise caution with investments in commercial REITs.
• Wait for Stabilization: Wait for clearer signs of trade stabilization before increasing exposure to Singapore.

DBS Group Holdings is a Singapore company I selected for the Global Best 50 Companies list.

Hong Kong

(i) Tariffs as we know them today:

• The same as China’s total 104% tariff, which includes reciprocal tariffs, Hong Kong’s economy is exposed to trade tensions and geopolitical risks.
• Exporters in the textiles and electronics sectors are vulnerable.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Sentiment Paradox: The market may show resilience despite weak fundamentals, possibly due to retail speculation or a delayed reaction.
• Exporters: Companies in the textiles and electronics sectors are vulnerable due to their exposure to Chinese supply chains and Western demand.
• Dual Risk: Hong Kong faces the dual risk of tariffs and geopolitical instability, which can weigh on institutional flows.

(iii) Recommended strategies:

• Cautious Stance: Adopt a cautious stance on Hong Kong equities.
• China Exposure: Focus on companies listed on the Hong Kong Stock Exchange (HKEX) with significant exposure to mainland China, as they may benefit from China’s domestic growth.
• Geopolitical Risk Monitoring: Closely monitor geopolitical developments and their potential impact on Hong Kong.
• Fundamental Analysis: Emphasize the importance of fundamental analysis to assess the true underlying value of Hong Kong companies.

China

(i) Tariffs as we know them today:

• Cumulative tariffs reaching 104% on Chinese goods
  • February 1: 10%
  • March 3: Additional 10% (totaling 20%)
  • April 2: Additional 34% (totaling 54%)
  • April 9: Additional 50% (totaling 104%)
• China is a major target of US tariffs, impacting many industries.
• The Chinese government has implemented stimulus measures to mitigate the negative effects.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Policy Buffer: Government stimulus and liquidity support have helped to delay a significant equity sell-off.
• Local Investor Dominance: Local investors influence the Chinese market, which can disconnect it from global macro signals.
• Exporters: Companies in the tech, textiles, and industrials sectors are losing pricing power and orders.

(iii) Recommended strategies:

• Cautious Approach: Maintain a cautious approach to Chinese equities.
• State Intervention Awareness: Be aware of the potential for state-driven market interventions.
• Stimulus Monitoring: Closely monitor the effectiveness of government stimulus measures.
• Fundamental Analysis: Focus on fundamental analysis to identify companies with sustainable competitive advantages.

Notes: I selected AIA Group, Alibaba, and Tencent as three China/Hong Kong companies for the Global Best 50 Companies list.

Japan

(i) Tariffs as we know them today:

• 10% baseline tariff plus 24% reciprocal tariff for a total of 34%.
• Tariffs that reduce global demand, especially in the auto and electronics sectors, impact Japan’s economy.
• The strength of the yen can also be a factor that hurts exporters.

(ii) Potential Impact on the economy of that country and the specific industries and leading companies:

• Yen Safe Haven: The yen’s strength as a safe-haven currency can hurt exporters but create opportunities for hedge funds.
• Auto & Electronics: Companies like Toyota, Honda, and Sony face challenges due to their reliance on the US and EU markets.
• Policy Uncertainty: The Bank of Japan’s (BOJ) policy stance creates uncertainty for investors.

(iii) Recommended strategies:

• Avoid Exporters: Avoid or reduce exposure to Japanese exporters.
• Favor Domestic Sectors: Favor domestic consumption and defensive sectors.
• Currency Hedging: Consider currency hedging strategies to mitigate yen-related risks.
• BOJ Policy Monitoring: Closely monitor the BOJ’s monetary policy decisions.

Notes: I selected four companies from Japan for the Global Best 50 Companies list: Chugai Pharmaceutical, Nintendo, Sony Group, and Toyota.

For several reasons described in my Global Best 50 Companies paper, the international companies I selected are on a par with the 15 I selected from the United States, which are: