Trump Weekly: Autos, retail, restaurant sectors brace for import tariffs

Here are the top industries and stocks that were impacted by the comments, actions and policies of President-elect Trump this week compiled by The Fly:

CHINA TARIFFS: In a research note to investors discussing the potential impact of proposed tariffs on e-commerce and advertising, Wells Fargo said that it believes Amazon (AMZN) has the most meaningful exposure to China-sourced goods at estimated 50%, but it is still likely able to mitigate impacts. Seller gross margins or units should be impacted, likely negatively impacting ad spend, Wells adds. Meta Platforms (META) at 10% and Alphabet (GOOG) at 7% are the most exposed to China advertisers, the firm adds. With that said, Wells doesn’t think a 60% China tariff would meaningfully change the competitive dynamic between its e-commerce coverage and Temu/Shein.

MEXICO, CANADA TARIFFS: President-elect Donald Trump said in(F) and General Motors (GM) were under pressure after Trump’s Truth Social posts, with Wells Fargo noting that autos are stuck in the middle of Trump’s geopolitics. The firm estimated a 25% Mexico/Canada parts tariff adds about $2.1K in cost for each U.S. assembly vehicle. This would be about 4% of the current ASP of $48K. Most OEMs source few parts from China, therefore an added 10% tariff has a small impact, it said. Moreover, entire vehicles produced in Mexico and Canada face 25% tariffs, likely $8K-$10K each. This could change the economics of exporting, Wells argued. The firm noted that surprisingly, General Motors and Ford appear most at-risk from a U.S. parts sourcing perspective. Both names show the largest drop-off in U.S./Canada sourcing since 2017, which has mostly shifted to Mexico. Trump’s tariff threat now increases material cost inflation risk. Wells pointed out that Stellantis (STLA) also sources over 20% of components from Mexico, up slightly vs. 2017. Parts inflation could add another $2B-$5B in costs.

TARIFF IMPACT ON RETAIL/RESTAURANTS: Wells Fargo said that as Trump contemplates a 25% tariff on goods from Mexico/Canada, new risks emerge across its Retail/Restaurant coverage. Unknowns are plenty, but with a consumer already on shaky ground, the firm would brace for potential inflation uptick and/or risk to Mexico/Canada operations. Hardline sourcing is diverse, with Home Improvement largely domestic, China at low double digits and Canada/Mexico likely in the low single digits; Auto parts China-heavy; Home Furnishings sources at about 80% from overseas, primarily Asia/Europe; Best Buy (BBY) at about 60% China, with Mexico being the 2nd largest, Wells noted.

Regarding Restaurants, the firm pointed out that restaurants are generally insulated from Canada/Mexico import tariffs, with the exception of certain Food & Beverage items. In some cases, there are sourcing alternatives. Wells believes the impact would be more likely felt via FX headwinds — on international sales — and in international markets where economies are impacted by tariffs, which could impact McDonald’s (MCD), Domino’s Pizza (DPZ), Restaurant Brands (QSR), Yum! Brands (YUM) and Starbucks (SBUX). Casual Diners with higher U.S. sales/unit mix would be less impacted, it added.

FDA HEAD NOMINEE POSITIVE FOR HIMS & HERS: BofA noted that Dr. Martin Makary, the man who President-elect Donald Trump nominated to lead the Food and Drug Administration as its commissioner, is the Chief Medical Officer for Sesame, a telehealth company that sells compounded semaglutide. The ability for Hims & Hers (HIMS) and peers like Sesame to sell compounded GLP-1s will be decided by the FDA and having a leader of the agency that currently works for a company that operates as a GLP-1 compounder is “at a minimum” a positive incremental development for the future of the broader compounded GLP-1 opportunity, the analyst tells investors. While the firm maintains its Underperform rating on Hims & Hers given negative competitive developments, it acknowledges “the upside risk around GLP-1s.”

COINBASE: Oppenheimer on Monday raised the firm’s price target on Coinbase (COIN) to $358 from $265 and kept an Outperform rating on the shares. The firm noted that the sentiment and momentum for crypto has gone through the roof after Trump won the election and Republicans secured the majority of both the House and Senate.

CONSTELLATION: Roth MKM noted that Constellation Brands (STZ) is the most exposed to possible tariffs on imports from Mexico. While there is only so much mitigation that Constellation can take, the firm believes that implementation might not happen, rather potential tariffs open negotiations; Constellation could be exempted; or brand elasticities could handle some pass-through. Roth estimated Constellation would need a 12% beer price increase to fully offset a 25% increase in beer cost of goods sold. The firm has a Buy rating on the shares with a price target of $298.

BEST BUY: Loop Capital lowered the firm’s price target on Best Buy to $100 from $110 and keeps a Buy rating on the shares. The firm thinks Best Buy stock is likely to have a significant overhang until the market receives more clarity on Trump administration tariffs given the fact roughly 60% of the company’s COGS are sourced from China.

TOUGH WATCHDOG: President-elect Donald Trump is mulling naming Gail Slater, a top aide to Vice President-elect J.D. Vance, to lead the Department of Justice’s antitrust unit, the Financial Times’ Stefania Palma and James Fontanella-Khan reported Wednesday, citing people familiar with the matter. Slater, who was seen earlier this month as a frontrunner to lead the FTC, is viewed as an aggressive enforcer, and her nomination would signify the incoming administration’s support for a tough enforcement stance, the authors note. Publicly traded companies currently involved in antitrust disputes include Microsoft (MSFT), Alphabet (GOOGL), Apple (AAPL), Amazon (AMZN), and Meta (META).