“Tariffs would create a headwind to the performance of stocks with high international revenue exposure due to the risk of retaliatory tariffs, as well as heightened geopolitical tensions,” strategists said in a note on Friday.

This concern extends to companies that rely heavily on international suppliers, which could face additional challenges from potential tariffs.

Goldman Sachs noted that prediction markets currently imply slightly higher odds of a Trump presidency compared to a Biden presidency. They also emphasized the uncertainty surrounding the size and scope of potential tariff increases but indicated that such increases appear likely if Trump wins.

“Although there is substantial uncertainty in the size and scope, tariff increases appear likely in the event of a Trump victory,” the note added.

The outcome of the US presidential election is expected to have a substantial impact on the US dollar and the relative performance of domestic-facing versus internationally-exposed firms.

In 2018, when the US announced tariffs and other trade barriers against China under the Trump administration, Goldman Sachs observed that its domestic sales basket outperformed its international sales basket by 9 percentage points.

The strategists suggest that investors should closely monitor the election developments and watch stocks of companies with significant international exposure.