Profits could take a 40% hit at companies impacted by the trade war, UBS says

Over the past several months, some of the weakest sectors of the U.S. stock market have been those considered the most exposed to escalating tensions between the United States and its major trading partners.Thus far this year, the materials sector XLB, -1.44%  has lost 1.1% while the industrials category XLI, -0.88%  is unchanged; both have severely underperformed the S&P 500 SPX, -0.71%  , which is up 7% over the same period.These losses have come amid a volley of protectionist policies from multiple countries. President Donald Trump has announced, threatened, or imposed tariffs on billions of dollars worth of products, including automobiles from the European Union and a variety of steel and aluminum products from the EU, China, and other countries. Many of these tariffs have been met with retaliatory measures. In the most recent, China on Wednesday announced new tariffs covering $16 billion worth of goods.