US industries could hurt companies across trade tensions: Cowen

Vastavam web: Though the escalating tensions between the United States and several of its trading partners could hurt companies across a broad range of sectors, several industries are poised to withstand them or even thrive, according to U.S. financial services firm Cowen and Company on Friday.China’s recent revisions to tariffs have a clear benefit to luxury retailers, Cowen analysts said in a report. While the country raised import duties on several categories of U.S. goods, it lowered tariffs on apparel, cosmetics, household goods and jewelry.

Other industries, including banks, restaurants and discount retailers, face relatively minimal impact from the burgeoning trade war and could even benefit under certain conditions, Cowen said.Banks do not rely directly upon imports and exports, so the biggest risk for the group would be an overall economic slowdown if the trade war were prolonged. In that case, regional and community banks in areas especially hit by tariffs, such as the rural U.S. Midwest, would have the most exposure to risk from an economic slowdown.

Restaurants are insulated from tariffs because they source most of their food from within the United States. As with banks, the biggest tariff-related risk for the industry is a general economic slowdown.As a result, quick-service restaurants may cut prices, especially if tariffs begin to hit customers’ wallets. That scenario would benefit large chains such as McDonald’s Corp and Taco Bell, owned by Yum Brands Inc, but not regional chains such as Sonic Corp or Jack in the Box Inc , Cowen analysts said.

Discount and off-price retailers are also well-positioned as trade tensions ratchet up. Walmart Inc and Costco Wholesale Corp derive more than half of their sales from groceries, which shields them from tariff pressures, Cowen said.