Tariffs Are Back on the Menu

Analyst Weekly, September 29, 2025

What’s new?

The US rolled out a fresh round of tariffs this week, and they’re hitting everything from branded drugs to furniture and heavy trucks. The headlines sound scary: 100% pharma tariffs, 50% cabinetry tariffs, 30% furniture tariffs, and 25% truck tariffs starting October 1. Yet, the market reaction has been more muted. Why? Because investors are already gaming out who wins, who loses, and where the opportunities lie.

Pharma: Big Stick, Small Carve-Outs

The biggest headline: 100% tariffs on branded pharmaceuticals. That sounds like a nightmare for drugmakers like Pfizer ($PFE), Sanofi ($SNY), and AstraZeneca ($AZN.L). But the fine print matters: the EU and Japan negotiated lower rates (15% tariffs), and companies with US manufacturing or new plants underway are exempt. Roche ($ROG.ZU), for example, broke ground on a new North Carolina facility that should shield it from the worst.

We think that this is the administration’s way of pushing for drug price cuts, not just to gain revenue. Pharma stocks could see headline risk, but with exemptions and global diversification, the sell-off may be shallower than the 100% headline suggests.

Cabinets, Furniture, and Trucks: Home Depot Meets Freightliner

Tariffs aren’t just about medicine. The US also slapped 50% tariffs on cabinets and vanities and 30% tariffs on upholstered furniture. That hits the housing and consumer discretionary space, from Home Depot ($HD) and Lowe’s ($LOW) to specialty retailers like La-Z-Boy ($LZB).

Meanwhile, the 25% tariff on heavy trucks has implications for industrial names like PACCAR ($PCAR) and Navistar (owned by VW), plus ripple effects for logistics and freight operators. But investors aren’t rushing for the exits: many US players already dominate their markets, and tariffs could tilt demand toward domestic production.

Tech and Semis: A Partial Pass

Semiconductors were rumored to be next, but so far tariffs are likely to be watered down. That’s a relief for Nvidia ($NVDA), AMD ($AMD), and Taiwan Semi ($TSM) investors who’ve been watching supply chain headlines like hawks. Instead, the US appears to be focusing tariffs on downstream products (finished goods) while avoiding upstream disruption. We think this could help keep inflation contained while still sounding tough on trade.

Investment Takeaway: The Big Picture

Tariffs are evolving from one-off headlines into a policy toolkit with three clear channels: (1) pricing leverage on pharma to force concessions, (2) market-share protection for domestic producers in furniture, cabinetry, and heavy trucks, and (3) revenue support via fiscal sterilization (tariff receipts offsetting weaker corporate tax intake). Net-net, this is less about blanket de-globalization and more about targeted pressure designed to shift bargaining power and cap inflation risk from upstream supply chains.

Transmission to markets:

Earnings & margins: Sector impact is uneven. Branded pharma faces headline risk and negotiation overhang, but carve-outs (EU/Japan at lower rates; US plants exempt) blunt worst-case margin compression. Consumer/industrials see mixed effects: imported inputs cost more, yet domestic incumbents can gain pricing power and share.
Inflation & rates: Concentration on downstream goods and exemptions tempers pass-through to CPI, preserving room for the Fed’s easing path. That’s one reason equity volatility has stayed contained.
Positioning & flows: Energy/industrials and US-centric manufacturers stand to benefit from import substitution; pharma requires selectivity as policy risk is repriced stock-by-stock rather than sector-wide.

Key uncertainties to monitor:

Implementation quality: How fast exemptions are granted and how “finished goods” are defined will set the true effective rate.
Legal path & durability: IEEPA challenges and Section 232 timelines determine whether this regime sticks into 2026.
Second-order effects: Corporate responses (onshoring, price pledges) may defang the headline rates faster than expected.

Tesco: Earnings Preview

We expect Tesco to deliver another strong earnings update, with sales and profits helped by a disciplined UK grocery market, firm consumer demand for value, and the company’s own strong execution. A key factor is that the UK grocery market remains rational, meaning competitors are avoiding destructive price wars and focusing instead on disciplined pricing and profitability. This stable backdrop allows Tesco to protect its margins while still competing effectively. At the same time, consumer behavior is shifting, with many shoppers trading down from more expensive branded products to cheaper alternatives. Tesco is well placed to capture this trend through its focus on value and its broad own-brand ranges, which help retain customers who might otherwise move to discounters.

Industry food inflation remains another important tailwind, feeding directly into like-for-like sales growth. Tesco is also gaining market share and demonstrating stronger execution than rivals Asda, Morrisons, and discounters, keeping profitability on track even as competition heats up. Asda is becoming more aggressive on pricing, but Tesco is tracking closely and retains the “firepower” to respond if needed. Crucially, the company’s strong cash generation underpins rising dividends and ongoing buybacks, which enhance total shareholder returns. Together, rational competition, earnings momentum, and robust capital returns keep Tesco well positioned for further upside.

Technical Rebound in Copper, but China Remains the Key Driver

Copper rose 3.1% last week to $4.770 per pound, bringing the rebound from the July low to roughly 10%. After the late-July plunge, when prices dropped more than 23% in a single week, copper is trying to stabilize. The selloff halted precisely in a well-known fair value gap ($4,343–$4,539) that was successfully defended in April, even after an dip to $4,027. As long as this zone holds, the technical setup favors a continued recovery.

Copper, weekly chart. Source: eToro

Investors should keep a close eye on China, the world’s largest consumer of copper. The country accounts for around 50% of global demand, with copper indispensable for construction, infrastructure, electronics, and e-mobility, all key sectors of China’s economy.

As a result, the copper price reacts strongly to China’s economic cycle. On Tuesday, the NBS Manufacturing PMI for September is due. It has remained below the critical 50 mark for five consecutive months, signaling continued weakness. On the supply side, China is rapidly expanding smelting capacity, which is putting processing fees under pressure. Major smelters are therefore urging the government to tighten control over capacity expansion.

Stress Test for Nike: Investors Await Earnings

Nike investors have been through a lot this year. Although the stock has recovered more than 30% since the April low, the overall picture remains gloomy. In 2025, it is still in the red and trades more than 60% below its record high.

The question now is: does the recovery have real substance, or is another slide ahead? An answer could come on Tuesday, when Nike reports quarterly results after the U.S. market closes. A convincing outlook could provide the momentum needed to push the stock higher.

Nike, weekly chart. Source: eToro

Industry Changing Rapidly

The footwear industry is expected to continue growing in the coming years, but competition is intensifying. Niche lifestyle players such as On Running or Allbirds are putting pressure on established brands. Lower entry barriers play into their hands. Outsourcing and direct-to-consumer models make it easier than ever for new players to enter the market. In addition, new sales channels are emerging. Platforms like Amazon, Zalando, or JD.com give smaller brands faster access to millions of potential customers.

Consumer behavior is also changing. Buyers are no longer loyal to just one brand, but mix and match depending on sport, fashion, or lifestyle trends. At the same time, geopolitical risks persist, making adjustments unavoidable. U.S. tariffs have made the choice of production sites one of the most important strategic issues. Nike produces mainly in Vietnam, Indonesia, and China, but generates more than 40% of its revenue in North America.

For investors: The key test is whether management can convincingly explain in the earnings call how the downward spiral will be stopped. The negative trend has recently accelerated, with declines in sales and earnings becoming more pronounced quarter after quarter. Without a sustainable turnaround strategy, the recovery will remain fragile and uncertainty could quickly turn into renewed volatility.