Squawk on the Street SOTS 2nd Hour: Tariffs Impact – From Stocks to States to Your Wallet 2/3/25
Feb 3, 2025
David Koston, Goldman Sachs' chief U.S. equity strategist, shares insights on the impact of newly imposed tariffs on Canada, Mexico, and China. He discusses the sharp decline in stock markets and potential earnings hit of 2-3% for the S&P. Koston highlights concerns from the automotive sector regarding production slowdowns, while also addressing how different U.S. states may benefit or suffer from these trade shifts. The conversation reveals the unpredictable nature of international trade and its immediate economic implications.
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Market Reaction to Tariffs
- Investors are not panicking because they believe these tariffs will be short-lived.
- The market reaction suggests investors see this as a negotiation tactic, not a major economic threat.
Currency Market Impact
- The Mexican and Canadian currencies are being hit hardest by the tariff news.
- This suggests that investors believe these countries' economies will be more negatively affected than the U.S. economy.
Treasury Yields and Inflation
- Lower treasury yields indicate investors are not worried about significant inflation.
- The market may view tariffs as potentially leading to lower demand rather than increased inflation.