Due Diligence on Tariff Duties
Due Diligence on Tariff Duties
Executive Summary
• A second Trump administration may seek to address persistent trade deficits through tariffs, reflecting his longstanding
view that current trade dynamics disadvantage the U.S.
• The tariffs proposed by the president-elect may be a headwind to economic growth, but they likely are not large
enough by themselves to knock the U.S. out of its late-stage expansion.
• Tariffs are net inflationary, but the extent that prices react to new duties are dependent on complex market
structures for the various goods affected.
• Globalization may be at a turning point, with potential shifts toward more localized production amid debates over the
benefits and risks of free trade.
• Higher tariffs may put pressure on corporate profit margins but could benefit more domestic-oriented small cap
equities as production onshore gains momentum.