Barclays has outlined its base case for tariffs, anticipating no further escalation on Chinese imports while characterizing President Trump’s proposed tariffs on Canada and Mexico as primarily political. The brokerage expects reciprocal tariffs of around 5% on other trading partners, reflecting a cautious but measured approach to global trade tensions. In a significant revision, Barclays cut its S&P 500 earnings-per-share estimate to $262 from $271, citing the economic ripple effects of tariffs and policy uncertainty.The brokerage also reshuffled its sector outlooks, upgrading US financials to 'positive' from 'neutral' due to strong near-term earnings momentum. Conversely, it downgraded consumer discretionary stocks to 'negative' as weakening sentiment, slowing growth, inflation pressures, and tariff risks weigh on the sector. The adjustments underscore Wall Street’s growing unease as trade policies reshape the investment landscape. With earnings forecasts trimmed and sector allocations shifting, Barclays’ latest moves signal a defensive pivot in an increasingly volatile market.
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