Chart of the week: Morningstar analysis; Tariff impact by sector
Morningstar Chief Economist’s analysis shows tariff impact by sector
This week’s Chart of the Week focuses on tariff impact by sector. Analysis by Morningstar’s Chief Economist Preston Caldwell, there is a varying impact sector-by-sector.
His analysis views the Consumer Cyclical, Basic Materials and to a lesser extent, Technology and Financial Services sectors as the most negatively affected by tariffs in a bear-case scenario.
The analysis shows Utilities, Consumer Defensive and Healthcare sectors as the least affected across all scenarios.
While recent news around ongoing trade talks and a bilateral temporary reduction in tariffs between the US and China are positive events, stocks have moved higher, accordingly; we still think that it makes sense to remain prepared and forewarned to the possibility that current promising developments change course or unravel.
Why it matters: Understanding how tariffs, and their effect on economic conditions, may affect valuations is vital for investors examining how their holdings fare under different economic and tariff regimes. Morningstar’s analysis examines expected fair value estimate impacts, at the sector and industry group level, across three tariff/economic scenarios (bull, base, and bear case) relative to before April 2, 2025.
Our analysis of US sectors shows varied tariff impacts depending on the economic scenario and the sector. While many sectors see limited declines (-8% or less) in bull and base cases, negative (-8% to -20%) and very negative (less than -20%) declines become more common in the base and especially the bear scenarios. Sectors like Consumer Cyclical and Basic Materials are among the most affected in the bear case.
You’re able to find previous editions of Chart of the Week here.
