From Morningstar: 2025-04-03 12:15:00

The US government imposes a 20% tariff on European goods, causing equity markets to drop. Shares of European electrical equipment suppliers fall by 5%. The USMCA agreement remains intact, benefiting companies like ABB ABBN and Schneider Electric SU, which manufacture and source components from North America.

Electrical equipment suppliers operate on a local-for-local model due to varying standards. ABB ABBN and Schneider Electric SU generate 25% and 28% of revenue from the US. With the USMCA intact, the impact of the tariffs on suppliers from Mexico is minimal.

Legrand LR faces the most impact from US tariffs as 45% of its cost of goods sold in the US are imported. However, suppliers have managed to pass on higher prices to customers. Fair value estimates remain unchanged for Schneider Electric, ABB, Siemens, and Legrand.

The latest tariffs will not significantly affect the profitability of these businesses. Electrical equipment suppliers also benefit from growth drivers like grid modernization and AI investment. Schneider Electric is currently undervalued by 14%, making it a preferred pick. ABB, Legrand, and Siemens appear fairly valued.



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