UBS analysts warn that emerging market (EM) equities may be underestimating the impact of rising U.S. tariffs.
- Over 35% of MSCI EM revenues come from exports, with 13% tied to the U.S., leaving them vulnerable as reciprocal tariffs take effect.
- UBS estimates the current average U.S. tariff rate of 16% could climb to 21%—up sharply from just 2.4% in 2024—if earlier tariff levels are fully reinstated.
UBS’s stress tests suggest tariffs and related economic slowdown could cut EM earnings by 6–9%, yet earnings forecasts have only been trimmed by 3% in recent months. As more downgrades come through, UBS expects this will weigh on EM equity performance going forward.
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This article was written by Eamonn Sheridan at www.forexlive.com.