Investment Rating - The report indicates a cautious outlook on US companies, particularly those exposed to Chinese suppliers and customers, suggesting a moderate negative impact from tariffs [2][3][51]. Core Insights - The White House has implemented significant tariff increases, raising the US effective tariff rate by 9 percentage points, which is six times larger than during the 2018-2019 trade war [5][6]. - Equity returns for US companies exposed to Chinese suppliers and customers initially underperformed by 4 percentage points around tariff escalation announcements, with a net effect of -1.3 percentage points after some recovery during de-escalation announcements [2][17]. - Companies with exposure to other international suppliers and customers showed only modest underperformance compared to domestically focused companies across all tariff announcement days [3][21]. - Companies expected to benefit from tariffs did not show significant outperformance during tariff escalations or de-escalations, indicating skepticism about the competitive advantages provided by tariffs [3][26]. Summary by Sections Tariff Impact on US Companies - The report analyzes how the equity market has priced the impact of tariffs on US companies, focusing on exposures to China and other international markets [11][12]. - Companies exposed to Chinese suppliers or customers had already underperformed by 3.7 percentage points before the first tariff announcement, suggesting some impact was priced in advance [20][23]. Industry-Level Analysis - Industries in the top quartile of exposure to tariff-driven input cost increases underperformed those in the bottom quartile by 8 percentage points on tariff escalation announcement days [36]. - The overall net underperformance for these industries was -3 percentage points, indicating a moderate negative impact from trade tensions [36]. Market Reactions - The equity market has not sold off significantly in aggregate, reflecting investor optimism that the worst tariff shocks are behind [8][50]. - The report suggests that while the market has priced in some negative effects of tariffs, the anticipated benefits for companies protected by tariffs remain limited and statistically insignificant [51][52].