Intel stock spikes after report of possible US government stake
Investing.com -- UBS analysts told investors in a note Friday that the market impact of President Donald Trump’s threatened 35% tariff on Canadian imports could be muted, provided key exemptions under the U.S.-Mexico-Canada Agreement (USMCA) remain intact.
While the proposed tariff hike, up from 25%, sounds dramatic, UBS noted that “the impact depends heavily on whether the USMCA exemption holds.”
Most U.S.-Canada trade is currently duty-free under the agreement, which could keep “the real economic costs… quite small relative to overall trade.”
Still, UBS warned that “sector-specific tariffs, such as the proposed 50% levy on copper, remain a separate threat,” and may be harder to challenge legally.
The tariff move is said to be the latest in a string of escalating trade actions, with Trump recently warning that “all of the remaining countries are going to pay, whether it’s 20 percent or 15 percent.”
According to UBS, Trump’s renewed confidence is driven by a resilient market backdrop.
“With US equities at record highs, little evidence of economic fallout in US inflation or labor data, and his fiscal package having won approval from lawmakers, Trump appears emboldened to escalate trade actions.”
He even tied equity performance to his tariff strategy, stating that “the tariffs have been very well received… the stock market hit a new high today.”
However, UBS noted that “a sharp sell-off in either stocks or bonds may be the catalyst needed to prompt a pause or reversal in tariff escalation.”
Ultimately, UBS expects more short-term disruption but expects the trade policy to “move toward greater stability in the second half of the year.”
The firm maintains a base case of a 15% effective tariff rate by year-end and a 6,500 target for the S&P 500 by June 2026.