US signed an agreement with Mexico and Canada that would delay its tariffs against its neighbouring nations by 30 days.
Investors should be cautious, even though optimism has been warranted that the global trade war appears to have at least been avoided for a couple of weeks. The United States may still raise tariffs on Mexico and Canada by March.
Goldman Sachs says that if it happens, both countries are likely to respond by imposing retaliatory duties on American products. This could be the biggest blow for the two US exporters listed below.
Ovintiv Inc (NYSE: OVV)
Ovintiv, a Denver-based petroleum company could be hit by retaliatory US tariffs from Canada.
Why? This Russell 1000 company is heavily dependent on the Canadian Market. It generates over 10% of revenue in the Great White North.
Ovintiv could lose market share if Canada increases tariffs on American imports.
Investors in Ovintiv may feel let down by the added revenue pressure, especially since Ovintiv is struggling to grow.
Ovintiv’s latest quarter reported a 12.3% decline on a year-onyear basis in total revenues, which fell to $2.3 Billion. This was worse than expected.
OVV’s free cash flow increased sequentially despite lower commodities prices during its third fiscal quarter.
Ovintiv also offers a dividend yield that is 2.86%, making it a more appealing stock to buy, especially for investors who are looking to earn income.
BorgWarner Inc. (NYSE: BWA).
BorgWarner could also feel the heat if Mexico, and not Canada, announced tariffs in March on American products.
The automotive and emobility provider generates more than 10% of their revenue in Mexico. The company could be affected by higher tariffs as they would disrupt its supply chain. This will also affect the share price.
BorgWarner products, like Ovintiv’s, will not be as competitive as before if Mexico increases duty on imports of all goods from the United States.
A trade war may ultimately mean that BorgWarner’s market share will shrink and its revenue will decrease. Investors have already seen a decline in BorgWarner’s top line.
BWA’s net sales for October were $3.45 Billion, which is significantly less than the forecast $3.53 Billion by experts.
BorgWarner shares currently pay a yield of 1.41 percent, which is attractive to investors who want to create a passive source of income.
Wall Street analysts have also given the Michigan automotive and emobility provider a “overweight rating” in their current consensus.
This post Retaliatory Tariffs against the US Could Hurt These 2 Exporters first appeared on The ICD
