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Breakfast News: Tariff Tuesday

March 4, 2025

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4 playing cards with the flags of the USA, China, Mexico, and Canada on them in front of poker chips.

Source: Image created by JesterAI.

1. Trading Partners Retaliate

Canada and China announced retaliatory action against the U.S., as midnight saw President Trump's threatened tariffs come into effect. Canada responded with 25% tariffs of its own, with China bringing in 10-15% increases to import levies on a range of goods.

  • "Canada will not let this unjustified action go unanswered": Outgoing Canadian PM Trudeau confirmed his country will slap 25% tariffs on C$30 billion worth of U.S. goods straight away, with further levies on C$125 billion of products coming into effect in 21 days.
  • Agricultural products account for the largest share of U.S. goods exported to China at 1.2%: Any tit-for-tat actions hamper businesses on both sides. For example, China announced additional tariffs on agricultural products, putting further pressure on related stocks such as Nutrien (NTR 1.24%) and Corteva (CTVA 0.47%).

2. Implications of Import Tariffs

Trump's 25% tariffs on Canada and Mexico could raise prices on energy, automobiles, and basic groceries for U.S. consumers. Such an inflationary impact may also impact monetary policy actions from the Federal Reserve.

  • Detroit's Big 3 take a hit: General Motors (GM 0.34%), Ford (F -0.42%), and Stellantis (STLA 0.84%) all finished in the red yesterday, as they make up to 40% of North American cars and trucks in Canada and Mexico. According to data from CNBC, a 25% import tax would raise the cost of a vehicle by an average of $6,250.
  • "Get ready to start making a lot of agricultural product to be sold INSIDE of the United States": Trump's comments sent farming stocks lower, as lower international demand could negatively impact revenue. Imported fresh produce from Mexico that have short shelf life cycles could see a noticeable uptick in price.

3. Walgreens Sized up by Sycamore

Walgreen Boots Alliance (WBA -0.22%) is close to being bought out by private equity giant Sycamore Partners. Although not confirmed, it wouldn't come as a surprise given the 50% price fall over the past year.

  • First dividend cut in decades last year: The business has struggled in recent years with declining retail pharmacy performance, particularly as pandemic-related demand for vaccines and testing has reduced. It has underperformed in trying to implement a transformation strategy related to primary care clinics via VillageMD.
  • Experienced in complex structured investments: A takeover by Sycamore Partners could lead to a break-up of Walgreens, with a significant restructure seeing some divisions sold. Another option could be to refinance the extensive debt pile to try and reduce pressure on some operating units.

4. Next Up: Lacing up for On's Earnings

On Holding (ONON -0.67%) released its Q4 and full-year report ahead of the market opening, delivering a strong set of results that built on the record results in Q3. After falling almost 18% in the past month due to concerns around a reinvigoration around Nike (NKE 0.66%) and tariff concerns, the upbeat results sent the stock up 9% in pre-market trading.

  • Beating the S&P 500 by 23% since Feb 2024 Rule Breakers recommendation: The business exceeded its latest outlook across all metrics, experiencing continued momentum from Q3 into the holiday season. Significant direct-to-consumer expansion provided a record-breaking gross profit margin of 62.1%.
  • Currently ranked 8th among Stock Advisor’s highest-conviction ideas: After facing some operational problems in Q2, shareholders were also reassured by the outlook, which flagged up anticipated operational efficiency gains for the year ahead. This could allow the business (and stock price) to keep growing at pace without having material supply chain or inventory management issues.

5. Foolish Fun

On is a brand many investors have never heard of, yet it's wildly popular in the running community.

What other brands do you keep hearing from hobbyists in your life that could inspire a worthwhile investment? Discuss with friends and family, or become a member to hear what your fellow Fools are saying.