How Trump’s U.S. tariffs might impact: S&P

March 12, 2018

NEW YORK - U.S. President Trump's impending tariffs increase the risk of a retaliatory action from affected countries, but the overall economic impact of the tariffs on the U.S. over the near term is likely to be minimal, with a mixed impact on corporate sectors, according to ratings agency Standard and Poor’s.

"U.S. domestic steel and aluminium producers are likely to benefit from the tariffs, while certain other corporate sectors would suffer from higher input costs," said S&P Global Ratings credit analyst, David Tesher.
"Posing a greater threat is the risk of retaliatory action by major U.S. trade partners, such as the European Union, and China triggering a trade war, hurting American exporters, global trade, and global economic growth."
S&P says it believes the tariffs will encourage U.S. production of steel and aluminium, raise utilisation rates, and keep domestic prices elevated over the next 2-3 years, but any gains could be temporary if the U.S. returned to a less-protectionist stance.
“As such, we could see positive rating actions in the next 12-24 months among U.S.-based metals and mining downstream borrowers most exposed to steel and aluminium prices - particularly those in the 'B' ratings category and other speculative-grade companies.”
Meanwhile, says S&P, the U.S. aerospace and defence, capital goods, and midstream energy industries are likely to suffer from higher input costs. (ATI).