Trump's tariffs on imports from China, Mexico, and Canada are shaking up the market. While most headlines are pretty negative, policy changes always create both winners and losers in the market.

Wondering how to position your portfolio during trade uncertainty? Let's examine which sectors might benefit, which could struggle, and how to adjust your strategy.

Current Tariff Situation

Here's what we're dealing with right now:

  • An additional 10% tariff on Chinese goods (bringing the total to 20%)

  • 25% tariffs on Mexican and Canadian imports (with a temporary one-month reprieve)

  • Potential additional tariffs on European Union goods

The market has already started reacting. Morgan Stanley reports that companies with significant exposure to China have underperformed the S&P 500 by 22% since March 2024, while those with Mexican exposure lag by about 10%.

Key Sector Impacts

Technology

The Mainstream View: Tech stocks will suffer because they rely heavily on Chinese manufacturing and components.

What's Actually Happening: There's a clear split within tech:

  • Hardware makers with Chinese manufacturing face real challenges

  • Software and cybersecurity firms have almost no tariff exposure

  • Cloud service providers mostly serve domestic customers with U.S.-based operations

This split creates buying opportunities in tech areas that don't depend on overseas factories.

Consumer Goods

The Mainstream View: Import costs will crush retailers and consumer goods companies.

What's Actually Happening: Companies face different impacts:

  • Businesses with strong brands can pass costs to consumers (think Costco)

  • Companies producing in America avoid tariff issues completely

  • Essential product makers like Clorox should see minimal impact according to Morgan Stanley

What matters most is whether a company has enough brand power to keep margins steady despite cost increases.

Materials and Manufacturing

The Mainstream View: Global sectors will face major disruptions.

What's Actually Happening: Domestic producers often win:

  • U.S. steel and aluminum producers like Nucor benefit when foreign competition costs more

  • American manufacturers gain price advantages against foreign rivals

  • Mining companies producing critical national security minerals may see growing demand

A company like Nucor, which makes steel in America for American customers, faces a much different outlook than multinational materials firms dependent on global operations.

Financial Services

The Mainstream View: Banks will struggle as global trade declines.

What's Actually Happening: Regulatory relief may matter more than tariffs:

  • Regional banks with mainly domestic operations face little direct tariff impact

  • Large banks could benefit from upcoming regulatory changes

  • Financial technology companies serving U.S. markets may avoid most tariff effects

Morgan Stanley notes that large-cap financials may actually perform well despite the tariff situation.

Defensive Sectors

The Mainstream View: Utilities and healthcare stocks are just safe hiding spots during uncertainty.

What's Actually Happening: These sectors could lead the market:

  • Utility companies such as American Electric Power have virtually no tariff exposure

  • Healthcare providers mostly serve domestic markets

  • Telecom companies like Verizon provide essential services with few imported components

In previous trade disputes, these defensive sectors often delivered strong returns while staying relatively stable.

Building a Trump Tariff-Resistant Portfolio

If you want to adjust your strategy for this post-tariff market, here's a practical approach:

1. Reduce Exposure Where Risks Are Highest

  • Retailers heavily dependent on Chinese imports

  • Tech hardware manufacturers with limited brand power

  • Companies with complicated international production they can't easily change

  • Agricultural exporters vulnerable to other countries' response tariffs

2. Consider Increasing Allocation to:

  • Domestic-focused businesses with few foreign inputs

  • Companies with strong brands that can raise prices

  • U.S. steel and aluminum producers

  • Cybersecurity and software businesses

  • Utilities and essential service providers

3. Practical Portfolio Adjustments

  • Don't overreact by completely dumping otherwise strong companies

  • Look for quality businesses unfairly punished in sector-wide selling

  • Consider dollar-cost averaging into new positions instead of making large one-time moves

  • Watch debt levels – companies with less debt typically handle temporary problems better

4. Monitor Policy Developments

The initial announcement of tariffs doesn't always match what actually happens. The recent temporary reprieve for Canada and Mexico shows how quickly policies can shift.

The Services vs. Goods Divide

One important pattern in previous tariff situations: service businesses generally outperform goods businesses. Companies mainly selling services instead of physical products typically have:

  • Fewer parts subject to tariffs

  • More operational flexibility

  • Less exposure to factory and shipping problems

This pattern suggests favoring software companies, financial services, healthcare firms, and other service-focused businesses.

What Jim Cramer Thinks (And Why That Matters)

CNBC's Jim Cramer recently highlighted stocks he believes will withstand Trump's tariffs. His picks include:

  • Oil and gas stocks, particularly Enterprise Products Partners

  • Utility companies such as Sempra and American Electric Power

  • Banks that could benefit from deregulation, especially Wells Fargo

  • Restaurant chains with domestic focus, including Brinker International and Texas Roadhouse

  • Steel manufacturers like Nucor

For followers of the "inverse Cramer" strategy—where investors do the opposite of Cramer's recommendations—this list gives you interesting possibilities. While the actual Inverse Cramer ETF (SJIM) shut down in January 2024, tracking services like Autopilot show the Inverse Cramer portfolio is up about 26% (currently $9,792.69 from an initial $5,200 investment).

The "inverse Cramer" idea became popular after several famous misses, most notably his recommendation to buy Silicon Valley Bank shortly before its collapse. We can't offer investment advice, but if you follow inverse Cramer thinking, you now know which "tariff-resistant" stocks he's bullish on.

Interestingly, even Tuttle Capital, who created the Inverse Cramer ETF, admitted that Cramer has been right about the "Magnificent 7" tech stocks, comparing him to "a broken clock that's right twice a day."

Market History: How Previous Tariffs Played Out

During Trump's first term, we saw a similar situation unfold in 2018-2019:

  • The initial announcement of tariffs caused sharp market declines

  • Certain sectors (steel, aluminum) saw immediate benefits

  • Many companies adjusted by moving production or finding new suppliers

  • Markets eventually settled as the uncertainty became clearer

This history suggests that immediate volatility is likely, but markets typically adjust to trade changes over time.

The Bottom Line

Tariffs create winners and losers in the market. Instead of completely overhauling your portfolio, consider targeted changes that cut back on the hardest-hit areas while adding to potential winners.

Keep in mind that markets often overreact to tariff news at first. Strong companies with healthy balance sheets and solid business models usually ride out these storms effectively, even if they face short-term challenges.

Successful investors during trade disputes focus on company fundamentals instead of daily headlines. Every policy change creates opportunities—the trick is finding them while everyone else fixates on the risks.