With the US presidential election in the spotlight, Goldman Sachs has been assessing the potential impact on global markets of changes in regulation, taxation and other government policies. The Wall Street bank said in a note that if former President Donald Trump returns to power, risks would increase regarding possible tariffs on European exports and a reduction in U.S. support for Ukraine. However, she believes that U.S. subsidiaries of foreign companies could potentially gain if Trump succeeds in cutting corporate taxes. The investment bank sees German large- and mid-cap stocks in the DAX and MDAX indices as the most vulnerable in this scenario due to the high number of export-focused companies. “For Europe, the prospect of tariffs on exports to the United States (a Trump proposal) and any reduction in funding to Ukraine (which would get Republican support) would both be very negative for European equities, in our view,” Goldman Sachs strategists said. » by Sharon Bell in the note to clients dated January 24. Trump has proposed a 10% tariff on all U.S. imports, which could hit Europe, which is a major trading partner, hard. Current US President Joe Biden opposes Trump’s tariff proposal. Around 20% of EU exports go to the United States, with machinery, pharmaceuticals and chemicals taking up a significant share, according to European statistics agency Eurostat. On average, European companies make 25% of their sales in the United States, but most come from U.S.-based companies rather than exports from the EU, according to Goldman Sachs. In such a scenario, the proposed import tariffs will not impact the revenues of American subsidiaries. The investment bank said that while sectors with high trade correlation, such as industrials and automobiles, appear most vulnerable, defensive markets like the SMI index in Switzerland and the FTSE 100 in the United Kingdom ” should both be protected from the direct impact of any customs duties. The Wall Street bank also revealed that a key area of possible resilience lies in its own basket of European companies with more than 50% sales exposure to the United States. Stocks in the basket include names like Intercontinental Hotels Group, owner of Holiday Inn, and Boeing aircraft parts. manufacturer MTU Aero Engines, Europe’s largest defense contractor BAE Systems, construction groups Ashtead and CRH, and Irish food and ingredients supplier Kerry Group. “In our view, it is better to view these companies as an American pocket embedded in the European stock market rather than as a group of companies manufacturing products in Europe and selling to the United States,” Goldman strategists said. Since these companies manage significant U.S. operations and assets, Goldman also believes they will benefit from possible U.S. corporate tax cuts under Trump. The Republican favorite pledged during the election campaign to lower it further to 15% if he was elected for a second term. As for a second presidential term for Biden, strategists said they would expect “much lower risk to Europe in terms of trade and financing for Ukraine.” However, they pointed out that Biden had discussed an increase in the corporate tax rate, “which would impact companies with exposure to the United States.” — CNBC’s Michael Bloom contributed reporting.