The oil crisis amid the Iran conflict is occupying investor attention. But stock markets need to turn their attention back to tariffs.
On April 2, Bloomberg reported that the Trump administration planned to hit the pharmaceutical sector with tariffs. Firms that did not agree to lower U.S. drug prices are subject to tariffs. Trump last threatened tariffs of 100% to 200%.
Drug companies that agreed to a pricing deal included Pfizer (PFE), Sanofi (SNY), Novartis (NVS), Bristol-Myers Squibb (BMY), Eli Lilly (LLY), and Novo Nordisk (NVO).
Investors might need to wait for the mid-term elections. The GOP might lose votes. If that happens, drug companies may set drug prices that align with their research and marketing costs.
Watch out for the steel and aluminum sectors. The Trump administration might impose 25% tariffs on finished products made with those imported metals. Commodity-grade steel and aluminum products face 50% tariffs. The stocks that might face selling pressure include Nucor (NUE), Steel Dynamics (STLD), ArcelorMittal (MT), and Cleveland-Cliffs (CLF).
Tariffs on those two metals will hurt small businesses the most. Firms of that size need to keep adjusting their operating model whenever tariff rates change frequently.
Your Takeaway
Tariffs will add to inflation. With oil prices going up, the two headwinds ahead will hurt consumers.
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