Trump Tariff Losers baskets in the US (UBXXTIL} and Europe {UBXEFFL} have performed as expected following recent tariff headlines. However, clients have expressed interest in a long/short tariff expression of tariff winners vs. losers.
The `winning' side is difficult to devise at this juncture, but I can identify what could be less impacted. In that regard, our favorite long/short expression is Consumer Services vs. Consumer Goods {UBXXSERV vs. UBXXGCX./D} which is up 8% in the past week as `Services' stocks have outperformed `GaAs' stocks (Chart 1). The intuition behind this pair trade? While both legs are consumer-exposed, the short `Goods' leg carries tariff risk (Goods are manufactured, often internationally) while the long `Services' leg does not. - UBS Strategy
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