The US is set to impose new tariffs on Canadian and Mexican imports, despite a temporary reprieve granted by President Trump earlier this month. This development has raised concerns among investors and experts, who warn that the impact of these tariffs will be felt across the economy, leading to price hikes.
Investors are being advised to reassess their portfolio picks, with many experts recommending a focus on high-quality stocks in sectors such as energy, materials, and industrials. These sectors are seen as inflation hedges and can generate returns even in uncertain market conditions.
The recent 10% tariff imposed on Chinese imports has also raised concerns about the broader trade war, which could have far-reaching implications for the US economy. Despite this, some experts see an opportunity for investors to profit from these uncertain conditions by investing in “real asset” sectors and inflation-proof stocks.
Key sectors that are expected to benefit from the tariffs include energy, materials, and industrials. The S&P Energy sector has seen a 2% gain over the past month, while the S&P Materials sector is up around 6%. Meanwhile, the S&P Industrials sector has gained roughly 5% in the same period.
Investors are advised to take a cautious approach and consider diversifying their portfolios to mitigate potential risks. With inflation still above the Federal Reserve’s target of 2%, experts warn that tariffs will likely raise prices for Americans, even if they don’t show up in economic data.
Source: https://www.cnbc.com/2025/02/05/finding-opportunity-in-a-trade-war.html