UBS warns that the trade war with China could escalate from current levels, despite President Donald Trump’s temporary pause on U.S. tariff threats against Mexico and Canada. As of Tuesday, the U.S. levied a 10% tariff on all Chinese goods, but Trump has previously threatened tariffs as high as 60% against China, UBS global equity strategist Andrew Garthwaite said. “We think tariff talk on China may rise beyond the 10% tariffs, maybe once a TikTok sale is complete,” the strategist wrote in a note Tuesday. In the middle of the tariff uncertainty, Garthwaite advises investors to stay overweight defensive names. When modeling for an aggressive tariff scenario, technology and consumer stocks underperform the market, he added. Heightened trade tensions could also stoke “nationalistic buying” in China, which is when consumers shift to domestic brands at the expense of U.S. consumer brands, he added. “If we get more of a global trade war, then the winners will likely be those companies who source locally versus those who export,” said Garthwaite. With this in mind, here are some of the companies UBS believes are most at risk if U.S.-China trade relations deteriorate further, or if new conflicts erupt with Canada, Mexico or the European Union: Consumer-centered companies make up the majority of the companies on the list of tariff-sensitive stocks. Athletic apparel maker Nike and Coach and Kate Spade owner Tapestry are among the names most at risk from rising tariffs. Tapestry shares are 15% higher Thursday on the back of strong Coach sales during the holiday, leaving the stock trading above the average analyst’s price target, implying that a pullback may be ahead. But Tapestry said it does not expect an additional 10% tariff on goods from China to hurt its results. UBS holds a neutral rating on Tapestry. Athletic apparel company Nike was one of the stocks hit the most before Trump offered a reprieve on goods from Mexico. China tariffs will affect both supplies and demand for Nike goods. Nike relies not just on imports from China, such as fabrics, but the country is also one of its biggest consumer markets. Nike shares have slipped more than 1% to start the year. NKE TPR YTD mountain Nike and Tapestry shares in 2025 Discount retailer Dollar Tree was one of the companies UBS called most vulnerable to high tariffs. Chinese imports account for a significant portion of the company’s sales. Around two-thirds of analysts covering Dollar Tree rate the stock a hold. Meanwhile, the consensus price target implies shares will gain 21% from Wednesday’s close. DLTR 1Y mountain Dollar Tree shares over the last 12 months UBS also identified auto stocks as names that will be hard hit by higher China tariffs. Shares of motorcycle maker Harley-Davidson have sold off more than 4% over the past five days, reaching a new 52-week low on Wednesday on disappointing fourth-quarter results. Analysts are on the sidelines. Of 15 analysts covering Harley-Davidson, nine rate it a hold. But the average price target is $35, or 33% above the stock’s close on Wednesday. Shares of Rivian are also down more than 3% to kick off 2025, underperforming the broader market. Tariffs could dent demand for Rivian in China, which already has a robust domestic electric vehicle market. UBS has neutral ratings on both Harley-Davidson and Rivian. RIVN YTD mountain Rivian stock in 2025 — CNBC’s Michael Bloom and Christina Cheddar-Berk contributed to this report.
