Macro Intelligence: a guide for Australian investors on US tariffs

Written by Juliette Saly

Tariff turbulence

In this week’s edition of IG Macro Intelligence, we take a look at the tariffs imposed on Canada, Mexico, and China by the US administration and the market implications.

25% tariffs, 100% on edge

US President Donald Trump has followed through with tariff threats, imposing levies of 25% on most goods from Canada and Mexico, and 10% on Chinese exports as well as on Canadian energy. President Trump also announced he would “definitely” be imposing new tariffs on the EU, without specifying the exact level or timing of the tariffs.

Canada and Mexico swiftly pledged to impose retaliatory measures, while China announced plans to challenge Trump's tariffs at the World Trade Organization.

However, in a sign of how turbulent things may be under President Trump, a late truce pausing the introduction of the tariffs appeared to be agreed with both the Canadian and Mexican leaders.

Flight to safety

In the immediate aftermath of the announcement, the US dollar rallied, sending Canadian dollar to a 2003 low while the Mexican peso fell more than 2% to its lowest level in three years.

USD index from 2020 - 2025

The greenback also surged to a record high against the offshore Chinese yuan while the Australian dollar, often seen as a proxy to a trade war, plunged to a near five-year low.

AUD/USD one-hour chart

The Aussie dropped to $0.609, breaking below the January low of $0.6129. This marked its weakest level since 2020 when it briefly approached $0.5500 during the early days of the COVID-19 pandemic.

My Bui from AMP:

“For now, we don't see that having a direct impact on the RBA rate cut decision. And there are two simple reasons. One is that we have very limited direct trade impact with the US. We actually have a trade surplus with the US, so we're probably not going to be the target for Donald Trump at the moment, unlike Canada or Mexico or China.

And second of all, the trade-weighted index, which is the Aussie dollar versus our main trading partners' currencies, hasn't fallen as much compared to the Aussie dollar against the US dollar. So basically, our trading prices haven't been as impacted.”

US crude oil one-hour chart

Equity markets also tanked, while oil prices spiked amid concerns over potential crude supply disruptions from the two largest US suppliers, Canada and Mexico.

However, gains were limited by the possibility of reduced fuel demand and Goldman Sachs analysts anticipate that the tariffs will have minimal short-term effects on global oil and gas prices.

Peter McGuire from XM told ausbiz, volatility is here to stay:

“I'm pretty sure President Trump wants cheaper oil to really bring that inflation number down. So that's where his mind is, you know, increasing production all across the shale revolution taking it up about 3 million barrels a day. So that's his first target for this year. And I just think it's going to be volatile.”

Australia outlook

Treasurer Jim Chalmers said Australia would not be immune from escalating global trade tensions, but the government is confident it can navigate the changes.

Citi analysts believe Australia can remain fairly protected in any potential trade war, due to its deep political ties with the US and the fact it runs a trade deficit with America, shipping only 5% of total exports to the US.

“While a hit to global trade flows could cause incomes and GDP growth to decline marginally, natural shock absorbers such as the exchange rate and strong economic ties with the rest of the world will likely imply minimal economic impact for Australia. We also consider that a trade war could lead to a decrease in goods prices domestically if exporters in China look for alternative markets to the US.”

Still, investors are concerned about potential implications which sent shares like Fisher and Paykel Healthcare and luxury retailer Cettire sharply downwards during Monday’s trade.

• Fisher & Paykel Healthcare (ASX:FPH)

Fisher and Paykel manufacture about 45% of its medical devices and systems in Mexico. The remainder is manufactured in its home base, New Zealand.

Fisher and Paykel Healthcare daily chart

Morningstar has decreased its FY26 gross margin forecast for FPH, estimating the company earns around 42% of its revenue from the US and about 60% of US volumes are supplied from Mexico.

The broker maintains its fair value estimate for the stock and doesn’t expect its market position to be significantly impacted by the tariffs as it maintains over 70% market share in its humidified ventilation technology used in hospitals.

FPH analyst recommendations chart

The average target price on the stock is $31.35, only marginally lower than where shares closed on Monday and most analysts recommend holding the stock, according to Refinitiv estimates.

ASX Tradewatch data suggests the stock can rally long-term, with both the 20 and 200-day moving averages sloping upwards.

• Cettire (ASX:CTT)

Australian-born luxury platform shares Cettire nosedived during Monday’s trade, despite trying to reassure investors it does not have any agreements in place with suppliers in either China, Mexico, or Canada.

Cettire daily chart

However, it confirmed around 7.5% of US gross sales were related to items manufactured in jurisdictions impacted by new US tariffs, and said it is continuing to assess changes to tariffs on imports.

CTT analyst recommendations chart

Prior to the tariff announcement, Citi initiated a SELL on the retailer, saying that overall too much uncertainty remains around the state of the overall luxury goods industry to give it confidence in a recovery for the company, which has shed more than 60% of its value in 12 months.

ASX Tradewatch data shows limited demand for the stock, despite its recent rally ahead of the tariff announcement.

• Treasury Wine Estates (ASX:TWE)

Winemaker Treasury Wine Estates, the “poster child” of the trade war between Australia and China during the Covid pandemic, is another stock that could bear the brunt of any tariff shocks.

However, most analysts are bullish on the stock, with Jarden saying the luxury wine is outperforming the sector.

Treasury Wine Estates daily chart

The average target price is $13.90, according to Refinitiv, suggesting a more than 30% upside from current levels.

Meanwhile, as markets gyrate on every announcement coming from the White House, analysts say keep calm and look at the bigger picture.

TWE analyst recommendations chart