From Morningstar: 2025-06-09 04:51:00

Morningstar’s senior US economist, Preston Caldwell, constructed three economic scenarios to assess tariff impacts on US sectors: base case, bull case, and bear case. Consumer cyclical and basic materials sectors are most affected in the bear scenario due to higher costs from tariffs, leading to slowdown in economic growth.

Tariffs and economic conditions influence valuations in stock sectors, making it crucial for investors to understand their impact. Morningstar’s analysis examines fair value impacts across sectors and industry groups under different economic scenarios relative to pre-tariff conditions.

US sectors face varying impacts from tariffs depending on economic scenarios. While some sectors see limited declines, others experience negative or very negative effects, especially with severe tariffs proposed. Hardest-hit sectors include consumer cyclical and basic materials, with industries like retail, vehicles and parts, and chemicals facing severe fair value reductions.

Despite potential significant impacts in certain sectors, some show limited declines in fair value across all scenarios. Consumer defensive sector remains largely intact, with industries like food and beverages, personal products, and education services showing resilience. Sectors like healthcare, utilities, and industries like software and insurance are expected to see the least damage.

Progress in trade talks and legal challenges may temporarily boost markets, but investors should remain cautious. Understanding how tariffs affect economic conditions is crucial for evaluating investments under different scenarios. The author or authors do not own shares in any securities mentioned in this article.



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