16 UK stocks least likely to be impacted by Trump tariffs

Glencore (LSE:GLEN), RELX (LSE:REL) and Shell (LSE:SHEL) are among UK safe havens after a European bank today named the stocks it believes offer some shelter from ongoing global trade uncertainty.

UBS’s selection of the 42 European companies least likely to be impacted features a total of 16 from the London market, with others including Barclays (LSE:BARC) and National Grid (LSE:NG.).

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The report comes as investors face a fast-moving situation, particularly as temporary reprieves for Mexico and Canada last night boosted hopes that President Trump is using tariffs as a negotiating tool rather than a permanent fixture of economic policy.

However, a 10% hike on imports from China has come into force today and the EU is next in line after Trump criticised the trade bloc for the scale of its trade surplus with the US.

UBS’s global equity strategists argue that the UK is likely to be among the least impacted regions, given that it has a trade deficit with the US.

Among the favoured UK names, UBS points out that Shell has the lowest dividend breakeven of the energy sector and a strong balance sheet to weather a weaker macro environment.

It added that the company’s large trading operation is well positioned to benefit from any market disruption coming from tariffs.

In a potential tariff escalation scenario, the bank expects that bulk commodities such as iron ore and coal will be more resilient than base metals as there is typically less speculative activity and a more stable demand profile.

This could favour Rio Tinto Registered Shares (LSE:RIO), which is also well placed to benefit from additional stimulus measures should China support its economy in the face of US tariffs. The other potential beneficiary is Glencore, which UBS expects to announce material cash returns to shareholders.

Land Securities Group (LSE:LAND) is chosen because the UK real estate sector is defensive against the direct impact of trade tariffs, with the vast majority of earnings derived from domestic property income.

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British American Tobacco (LSE:BATS) is regarded as being well positioned given that the tobacco sector is highly defensive through relatively stable earnings revisions, and offers high returns that investors could gravitate towards in an uncertain global environment.

In addition, BAT does not import from Canada, Mexico or China to the US as cigarettes are manufactured locally and vapes imported from Indonesia.

National Grid should also be a defensive play in the event of economic weakness as 45% of its enterprise value is in US regulated businesses, which should have a translation benefit through a stronger US dollar and weaker pound.

Strongly-performing FTSE 100 company RELX is backed given that the clients in its end markets are in low volatility areas, such as academic libraries, hospitals, auto insurance and law firms.

In European banking, UBS believes Barclays and SocGen are two of the stocks best suited to the potentially weaker operating environment conjured by the current headlines.

They screen positively because of their outlook for earnings growth, with the investment banking and credit card lending exposure of Barclays seen as beneficial.

The other UK stocks on the list are Halma (LSE:HLMA), Marks & Spencer Group (LSE:MKS), Next (LSE:NXT), Compass Group (LSE:CPG), Admiral Group (LSE:ADM), IG Group Holdings (LSE:IGG), Trustpilot Group (LSE:TRST) and Coca-Cola HBC AG (LSE:CCH).

Tech and motor risks 

For US investors, the 10% tariff on Chinese imports that came into force earlier today will increase costs for a number of mega cap tech firms that rely on Asian supply chains.

Among the Magnificent Seven, Saxo Bank believes that Apple Inc (NASDAQ:AAPL) is the most exposed due to the critical role that China plays in its supply chain for iPhones, MacBooks, and other hardware.

Saxo said: “A 10% tariff on Chinese imports increases production costs, forcing Apple to either raise prices or absorb margin compression.”

The bank added that NVIDIA Corp (NASDAQ:NVDA) could face cost pressures from higher semiconductor import prices, although its dominance in AI chips gives it strong pricing power.

Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc Class A (NASDAQ:GOOGL) have some exposure as they import cloud computing hardware and electronic devices like Kindle and Google Pixel.

Microsoft Corp (NASDAQ:MSFT) and Meta Platforms Inc Class A (NASDAQ:META) are likely to be relatively insulated as their core businesses rely on cloud computing, software, and advertising, with limited hardware exposure.

Tesla Inc (NASDAQ:TSLA) is also vulnerable as it imports batteries and components from China, making its vehicle production costs rise. However, Saxo points out that Tesla’s valuation is built on more than just being a car manufacturer.

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The wider US auto industry relies heavily on global supply chains, with major exposure to Mexico, Canada, and China.

The shares of Ford Motor Co (NYSE:F) and General Motors Co (NYSE:GM) closed down by 2% and 3% respectively last night, having been considerably lower at the start of yesterday’s session.

Saxo said: “Tariffs on Mexico, in particular, could be highly disruptive, especially as auto parts go in and out of the US several times before ending up in a finished product. This could mean tariffs not just add to the cost pressures for automakers, but rather multiply it.”

Prior to yesterday’s reprieve, Jefferies said applying a 25% import duty to the $172 billion of vehicles and parts imported from Canada and Mexico would add $43 billion to industry costs.

That’s the equivalent of $2,700 to the average price of vehicles if applied across 16 million units.