Trump Tariffs Will Hit Producers More Than US Consumers, Says Julius Baer's Mark Matthews 

The import tariffs to be announced by US President Donald Trump on Thursday will impact manufacturers more than American consumers, according to Mark Matthews, head of research-Asia at Swiss multinational bank Julius Baer.

"Imported consumer goods only represent 4% of the total consumer expenditure in the US. Tariffs will be a big hit for the manufacturer but not so much for the consumer," Matthews told NDTV Profit.

He explained that about 60% of imported manufactured goods in the US are intermediate products like steel, plastics, and circuit boards. Other than the product, value addition like design, marketing, sales and distribution happens locally and, therefore, do not attract import levies. Hence, consumers do not face higher prices.

Moreover, the share of manufacturing in the world's largest economy is just about 15%.

Matthews expects a 20% US tariff on all imports. "Details may take longer to work out."

Worries about the US economy come not just from trade tensions but also potential job losses, he said. Citing the Elon Musk-led Department of Government Efficiency implementing reductions in the US federal government workforce, Matthews said it can have a spillover effect on the labour market.

"Many people are worried that employers may take a page out of Elon Musk's book and cut workers. The factor that weighs on sentiment is the DOGE," he said.

Volatility will remain as the Trump administration brings uncertainty, and a bear market in the US will shake markets globally.

Despite such headwinds, Matthews is confident about India. Following the market correction in recent months, India is now "back to fair value".

"Earnings will return to double-digit growth next year. It will be one of the best markets in the next 12 months," he said, adding that financials led by large private banks will perform well.

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