UBS analysed 450 million words to find the companies most worried about Trump's trade war

  • UBS analysed hundreds of thousands of earnings calls to understand which companies are most impacted by US President Donald Trump's trade war.
  • UBS found that words like trade, tariffs, and trade war have been used more often in the last year than at any other point since 2010.
  • The automotive sector has discussed the trade war most frequently and has seen the biggest impact in terms of share price drops.

When it comes to macroeconomic risks for businesses, Donald Trump's trade war is pretty much the only game in town right now.

Trump's tariffs on goods flowing into the USA from China, the EU, and Canada — and his threats to increase them — are taking up a lot of thinking time for major corporations at the moment.

UBS set out to find out which industries are worrying about trade wars the most using a technology called "Transcriptlytics." The proprietary technology allowed the bank to analyse hundreds of thousands of earnings calls held by companies around the world over the past few years. In total, the Swiss bank says, it combed over more than 450 million words of text. 

RELATED: Take a look at the impact of trade tensions between the U.S. and China:

19 PHOTOS
Impact of trade tensions between US and China
See Gallery
Impact of trade tensions between US and China

Head chef Liang Xin poses with a piece of beef imported from the U.S. in the kitchen at Wolfgang's, a high-end steak house in East Beijing's Sanlitun district, China, April 6, 2018. Liang said U.S. beef has always been limited in China, so he doesn't know how customers would react if the restaurant has to raise prices.

(REUTERS/Thomas Peter)

Liu Anqi rolls dough in flour made from imported grain at the baking studio she runs with friends, in Beijing, China, April 12, 2018. Liu has just opened a bakery in Beijing with her friend. She also teaches customers how to make cakes with a brand of flour that uses only wheat from the United States and Canada. "Flour is one of the most important ingredients in baking and its quality varies with different brands," Liu said, adding that finding a new brand would be time-consuming and higher taxes on this wheat would force her to raise cake prices and tuition fees, which could turn customers away. 

(REUTERS/Thomas Peter)

A detail of the Harley-Davidson brand name is photographed on the motorcycle of Guo Qingshan in his village outside Beijing, China, April 7, 2018. "I love the sound of the engine and the muscle of the motor. When I ride it, I feel free and proud," Guo said. However, Guo has his limits. If prices rise, Guo said he wouldn't contemplate buying another Harley. 

(REUTERS/Thomas Peter)

Fried vegetables are seen in the kitchen of the restaurant where chef Liu Ming works, in Beijing, China, April 11, 2018. Liu said the oil that his restaurant uses is produced with soybeans imported from the United States, and the business won't change the brand even if prices rise. "We use this oil because it gives the food a bright colour and does not leave a strange smell or taste," he said. "We don't know what will happen to our dishes if we change the oil."

(REUTERS/Thomas Peter)

Xie Guoqiang, who runs the Vin Place wine and liquors store, poses for a photograph inside the shop in Beijing, China, April 10, 2018. Xie said in an interview that the tariffs would have little impact on his business, as the shop mostly imports wine and liquors from France, Chile, Austria and Argentina.

(REUTERS/Damir Sagolj)

A bottle of Jack Daniel's Tennessee whiskey is seen on a shelf at the Vin Place wine and liquors store in Beijing, China April 10, 2018. Xie Guoqiang, who runs Vin Place, said in an interview that the tariffs would have little impact on his business, as the shop mostly imports wine and liquors from France, Chile, Austria and Argentina.

(REUTERS/Damir Sagolj)

Liu Ming, a chef at a Sichuan restaurant in Beijing, poses for a picture at the back door of the kitchen where he works in Beijing, China, April 11, 2018. Liu said the oil that his restaurant uses is produced with soybeans imported from the United States, and the business won't change the brand even if prices rise. "We use this oil because it gives the food a bright colour and does not leave a strange smell or taste," he said. "We don't know what will happen to our dishes if we change the oil." 

(REUTERS/Thomas Peter)

Liu Anqi uses flour made from imported grain at the baking studio she runs with friends, in Beijing, China, April 12, 2018. Liu has just opened a bakery in Beijing with her friend. She also teaches customers how to make cakes with a brand of flour that uses only wheat from the United States and Canada. "Flour is one of the most important ingredients in baking and its quality varies with different brands," Liu said, adding that finding a new brand would be time-consuming and higher taxes on this wheat would force her to raise cake prices and tuition fees, which could turn customers away. 

(REUTERS/Thomas Peter)

A bottle of oil is seen in the kitchen of the restaurant where chef Liu Ming works, in Beijing, China, April 11, 2018. Liu said the oil that his restaurant uses is produced with soybeans imported from the United States, and the business won't change the brand even if prices rise. "We use this oil because it gives the food a bright colour and does not leave a strange smell or taste," he said. "We don't know what will happen to our dishes if we change the oil." 

(REUTERS/Thomas Peter)

Zang Yi poses for a picture as her Tesla car is charging at a charging point in Beijing, China, April 13, 2018. Zang said if the trade tensions resulted in pricier U.S. imports, she wouldn't consider American brands when the time comes to buy a new car. "With the tariff, I would have to pay tax of 100,000 yuan to 200,000 yuan if I were to buy a new Tesla," she said. 

(REUTERS/Thomas Peter)

Zang Yi charges her Tesla car at a charging point in Beijing, China, April 13, 2018. Zang said if the trade tensions resulted in pricier U.S. imports, she wouldn't consider American brands when the time comes to buy a new car. "With the tariff, I would have to pay tax of 100,000 yuan to 200,000 yuan if I were to buy a new Tesla," she said. 

(REUTERS/Thomas Peter)

A Chinese woman tastes wine during a wine seminar in Beijing, China, April 14, 2018.

(REUTERS/Thomas Peter)

Shan Yuliang, salesperson at a cigarette and wine shop, poses with a carton of Marlboro cigarettes in Beijing, China, April 8, 2018. "The moment I saw the news about the trade war on the internet, I felt something big was coming. Previously I would not think about what brand to buy. Now I will give it a second thought and avoid buying American products to defend my country," Shan said. 

(REUTERS/Thomas Peter)

Wine tasting teacher Li Yangang poses for a picture during a wine seminar in Beijing, China, April 14, 2018. Li said in an interview that reduced sales of American wine in China would not hurt the local market because of its relatively small market share. "Australian wine and French wine would have a bigger impact," he said. 

(REUTERS/Thomas Peter)

Cartons of Marlboro cigarettes are seen stacked up on a shelf between Chinese cigarettes at a cigarette and wine shop in Beijing, China, April 8, 2018. 

(REUTERS/Thomas Peter)

Student He Bingzhang lights a Marlboro cigarette in Beijing, China, April 8, 2018. "I don't think the trade war would change my behaviour. I don't smoke a lot, probably one pack a month. Even if it costs 100 yuan, I would still buy Marlboro because it is affordable," He said. 

(REUTERS/Thomas Peter)

Student He Bingzhang poses for a picture as he smokes a Marlboro cigarette in Beijing, China, April 8, 2018. "I don't think the trade war would change my behaviour. I don't smoke a lot, probably one pack a month. Even if it costs 100 yuan, I would still buy Marlboro because it is affordable," He said. 

(REUTERS/Thomas Peter)

Guo Qingshan poses on his Harley-Davidson motorcycle in his village outside Beijing, China, April 7, 2018. "I love the sound of the engine and the muscle of the motor. When I ride it, I feel free and proud," Guo said. However, Guo has his limits. If prices rise, Guo said he wouldn't contemplate buying another Harley. 

(REUTERS/Thomas Peter)

Beef imported from the U.S. is seen at Wolfgang's, a high-end steak house in East Beijing's Sanlitun district, China, April 6, 2018. A 15-kg whole cut of beef from the United States is around 20 percent more expensive than its Australian counterpart, said Daniel Sui, deputy general manager at Wolfgang's. "Customers like U.S. beef because it tastes juicy and tender, but Wolfgang's only sells around seven to eight pieces of U.S. imported beef steak each day," Sui said. "The limited supply is because the Chinese government bans feed additives and only 5 percent of U.S. beef is qualified for export." 

(REUTERS/Thomas Peter)

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

UBS found that perhaps unsurprisingly words and phrases like trade, tariffs, and trade war have been used significantly more in the last year that at any other point since 2010. Words from what the bank calls the "trade taxonomy" have made up roughly 8% of recent earnings calls. Previously, they had not been higher than around 2% at any point since 2010.

"Starting at the global level it would be logical that the frequency of usage of "trade war" related language would have picked up in recent reporting periods, compared to the prior 6 years of data (the duration of the data set)," UBS' team of James Arnold, Joao Toniato, Nick Nelson, and Jad Younes said.

Screen Shot 2018 09 10 at 12.20.54UBS Evidence Lab

Certain industries seem more concerned with President Trump's tariffs than others — or at least they are talking about them more.

That does not necessarily correlate, however, with how much they will actually be impacted by the trade war, UBS said.

"There are a number of sectors – e.g. luxury and software where the frequency of 'trade war' language has risen and the sectors have outperformed, i.e. the market appears to be sanguine about the potential risks."

There are of course sectors that are both fearful of tariffs and seeing an impact already. The automotive industry has both the most frequent discussion of the trade war and the biggest negative impact in terms of share price drops in the sector.

Auto companies are particularly worried about the trade war given that Trump has threatened to slap tariffs on the car industries of Japan and the EU. A possible tariff of 25% would mark a major hit to the profitability to automakers. Just this week, Swedish automaker Volvo postponed a $30 billion IPO, citing uncertainty around the trade war.

The chart below, compiled using Evidence Lab data, shows the usage of trade war related words in earnings calls, alongside the sector's performance since the beginning of the trade war:

Screen Shot 2018 09 10 at 15.34.49UBS

NOW WATCH: An aerospace company reintroduced its precision helicopter with two crossing motors

More from Business Insider: 
It looks like Trump has found the next big target in his trade war — Japan
Thursday marks probably the most important moment yet in Trump's trade war with China
GOLDMAN SACHS: Buying these 17 stocks could help you crush the market as Trump's trade war heats up

SEE ALSO: Britain's showdown with the Chinese military in the South China Sea is threatening to derail a post-Brexit trade deal

Read Full Story