On Monday (14 April), the US announced new semiconductor and pharmaceutical import probes. This is likely a precursor to sector-specific tariffs from the Trump administration. Although exact details on tariff sizes are yet to be confirmed, some UK shares could be negatively affected. Here are two that are at the top of my list.
Supply chain issues
AstraZeneca (LSE:AZN) is one of the most prominent global players in the pharmaceutical space. The stock is down 14% in the last month and down 7% in the past year. The short-term move already reflects some concern from investors about the impact of the new US trade policies.
In short, the US is AstraZeneca’s largest market. The company manufactures and exports a range of drugs to the US, including treatments for cancer and respiratory diseases. Therefore, President Trump’s proposed tariffs on pharmaceutical imports could directly affect revenue.
Historically, drugs have been exempt from global tariffs due to their life-saving nature. Yet this doesn’t appear to apply right now, with chatter over the past week indicating that import levies are definitely going to happen for this sector.
The company does indeed have US manufacturing facilities, such as in Maryland and Delaware. It could respond by expanding domestic production to limit import charges. Further, it could look to absorb the tariff costs, meaning that consumer demand stays high. However, I think it’s going to be a tough year ahead for the company to navigate the supply chain workarounds.
Penny stock woes
A second company in the spotlight is IQE (LSE:IQE). The penny stock has a market cap of £92m and has lost 66% of value in the past year. IQE is a leading supplier of semiconductor components used in various electronic devices.
The company has significant operations and customer bases in the US, including partnerships with major tech firms. For example, it supplies products directly to companies, which then add components and sell to Apple. So, the impact that Apple is feeling right now, with tariff headaches with China, could filter down to lower demand for IQE.
Aside from this, the tariffs will impact the company more directly from its exports to the US. It’s not a large business, so I struggle to see it being able to invest in making a new production facility in America (it currently is based in Cardiff).
On the other hand, the share price could rally in the future as the products are in demand for various AI projects. This is the future, so some significant contract wins could cause investors to get excited. However, right now I think the import levy concerns are front of mind for many.
Overall, I’m staying away from both companies given the current headline news and feel there are better investing options elsehwere.
