Heading into the Trump/Biden debate this week, Goldman was out with a useful note on their expectations for a Republican victory.
USD: Upside bias under a Republican victory
- Tariff Policies: Trump has proposed several potential tariff policies, including a 10% across-the-board tariff on imports and a 60% tariff on imports from China. These tariffs are expected to strengthen the USD due to reduced import volumes and increased demand for domestic goods.
- Market Expectations: Prediction markets suggest a higher probability of a Republican sweep, which typically aligns with stronger fiscal conservatism and policies that favor a stronger dollar
US Stocks with high International revenue or supply exposure: Expect pressure for these types of stocks
- Retaliatory Tariffs: The risk of retaliatory tariffs from other countries in response to US tariffs could negatively impact companies with significant international sales.
- Supply Chain Disruptions: Tariffs on imports from China could disrupt supply chains and increase costs for companies reliant on Chinese suppliers.
- Geopolitical Tensions: Heightened geopolitical tensions could further strain international operations and revenues for these firms. Technology and cyclicals are highlighted as sectors with the highest international sales exposures
