A dynamic research approach equips analysts to navigate complex and rapidly changing conditions.
Tariffs remain front and center for investors, and for good reason. They stand to reshape supply chains, shift cost structures, and introduce added complexity into corporate fundamentals. But it’s not only the tariffs themselves that matter, it’s also the pace of change: new rounds imposed, paused, adjusted and renegotiated. The landscape keeps moving, and so do company exposures.
For credit investors, this raises a pressing question: How do you keep your analyses of a global corporate universe both consistent and current when key inputs are in constant motion?
It’s not a small challenge. The path from policy to balance sheet is rarely straightforward. Tariffs on raw materials can squeeze downstream manufacturers. Changes in costs can ripple through consumer behavior in ways that aren’t always intuitive or consistent across regions. And companies never mentioned in a trade announcement may nonetheless be deeply affected by indirect fallout.
Below is our blueprint for conducting credit analysis in this kind of volatile environment—where exposures shift quickly, and few companies are insulated from the ripple effects. This framework has proven successful in past challenging environments, such as during the COVID-19 pandemic and the subsequent surge in inflation.
A Research Framework Built for Uncertainty
A strong credit-research framework doesn’t rely on perfect, singular forecasts. Instead, it allows analysts to develop a range of probability-weighted outcomes based on micro and macro scenarios, and to revisit assumptions as conditions evolve. That flexibility makes it possible to react quickly, without rebuilding the entire view each time something changes—a critical advantage in a market shaped by shifting expectations.
When President Trump first announced sweeping tariff measures on April 2, we quickly identified which industries were most exposed. Using a shared, probability-based macro outlook—including scenarios for growth, inflation and tariff rates—we worked across our global team to pinpoint industries most likely to come under pressure, and why.
In auto manufacturing, the large tariff rates prompted broad reassessment. In consumer and retail, geographic concentration of manufacturing facilities raised flags. Analysts used this top-down filter as a signal to dig deeper.
This kind of flexible, scenario-based framework continues in real time, as tariff policy and the macro environment evolve. Fundamental analysts collaborate across asset classes and with economists to explore these issues, revisit assumptions, adjust conviction levels and communicate potential ratings movements as new information emerges. The result is a live view that flexes with the data.
The Power of a Flexible Framework
Because the framework embeds a range of potential outcomes from the start, it also helps distinguish between different kinds of change in outlook. In some sectors, the distribution of possible credit outcomes has widened—introducing greater left-tail risk. In others, ratings expectations have shifted more broadly toward stress. That ability to tell whether the risk profile is growing more uncertain or simply more negative is essential when volatility is systemic but uneven.
It's also critical to account for geographic nuance. The impact of tariffs may be inflationary in one region, deflationary in another, and neutral for the exporter.
For example, if high tariffs discourage Chinese exports to the US, those same goods may simply be redirected to other markets—creating downward price pressure there. Even though they’re not the original targets of the policy, companies in those regions may face new margin pressures, while Chinese producers might remain more stable than expected.
Analysts need to factor in all of it—and a flexible framework makes that possible.
Tariffs Could Reshape Some Industries
Since April 2, we’ve seen meaningful shifts in potential tariff scenarios and have listened to companies explain their exposure and ability to mitigate tariff impacts. We’ve incorporated this information across our global coverage universe. Some industries have seen modest to significant re-ratings, others have benefited, and still others are feeling the macroeconomic fallout rather than the tariffs themselves.
- Auto manufacturing has been at the epicenter since April 2, when the Trump administration levied 25% tariffs on nearly all imported vehicles and auto parts from outside North America. We expect these tariffs to immediately impact profitability and reduce production volumes as high vehicle prices dampen consumer demand. Additionally, the industry is contending with increased input costs due to steel and aluminum tariffs. In response to these challenges, we have significantly revised our ratings across the sector. The range of potential outcomes has widened, with larger adjustments to downside ratings to account for the measures’ severity.
- The consumer and retail sector has also taken a hit, with varying impacts on different companies depending on where they source their products, how their supply chains are structured, and the strength and pricing power of their brands. Companies heavily reliant on manufacturing in China and Vietnam are more vulnerable, in our analysis, and have faced more downgrades in our ratings expectations. Companies with diversified sales and production footprints and strong brand equity have fared better.
- Some metals and mining companies have benefited from higher tariffs. US steel and aluminum producers gain from import tariffs amid high global supply, with US hot rolled coil steel prices rising from $689 per ton in January to over $900 in April 2025. Gold producers are thriving as gold prices surge due to concerns over economic growth, fiscal deficits and geopolitical risks. By contrast, metals like copper and iron ore, tied to global and Chinese economic growth, face headwinds in a high-tariff environment, though Chinese stimulus efforts may soften the blow.
- Energy—a sector without direct exposure to the tariff measures—has been hurt by second-order effects. Tariffs are likely to be a drag on global growth, and slower growth weighs on energy demand. The Trump administration has also been vocal about its desire for lower energy prices, and OPEC+ has decided to unwind its production cuts more rapidly than the market expected. Between April 1 and May 5, the price of West Texas Intermediate crude oil fell from $72 per barrel to $57—a multiyear low. (That decline has since been erased by the conflict currently unfolding in the Middle East.)
These trends illustrate a broader point: the effects of tariffs can be uneven, and outcomes vary widely by company and region. A flexible, probability-based framework allows analysts to cut through that complexity—rapidly assessing each issuer on its own fundamentals while staying responsive to a constantly evolving landscape.
When conditions are complex and fluid, as they are today, managers need to be able to keep up. Our blueprint? A well-structured, responsive research framework that quickly connects the dots—and delivers the insights needed to take action.
