- Trump's proposed tariffs are expected to hurt companies with international supply chains.
- However, some areas of the market are set to benefit from less foreign competition.
- Market experts shared seven US stocks that will rally from protectionist policies.
There's been a lot of buzz about how president-elect Donald Trump's proposed tariffs could negatively impact some of the market's biggestnames. Some of the largest multinational corporations in the S&P 500 have heavily diversified supply chains with exposure to China and other international economies.
However, for every company losing out from Trump's tariffs, there's another set to benefit from the red wave election outcome. Tariffs will lend a helping hand to some areas of the US economy by incentivizing domestic consumption and investment, according to DWS Group's Americas Chief Investment Officer David Bianco.
With the US having shifted toward a service economy model, businesses aren't as dependent on physical assets as they were in the past, leaving them less exposed to supply chain risks and potential tariffs.
Certain areas of the technology industry will be shielded, especially companies that don't manufacture physical products. Software, cloud services, and digital platforms have traditionally not been negatively impacted by protectionist policies.
"Whether it be software as a service, internet, social media, digital technology, or communications — they're not too worried about tariffs," Bianco said.
Another big winner from tariffs and Trump policies in general is the financial sector. Banks are another great example of businesses that don't depend on imports. Regional banks, in particular, have very little exposure to non-US revenues. According to Clayton Gardner, co-CEO of wealth management firm Titan, banks are also likely to receive an additional boost from deregulation under Trump.
In general, Gardner believes low-margin, cyclical businesses with little international exposure will be the biggest winners from Trump's policies. These businesses will experience minimal impact from tariffs while also benefitting from lower corporate taxes, which Gardner expects to go down under Trump.
You might interact with some of these companies, which Gardner dubbed "good old-fashioned American businesses," on a day-to-day basis. They include grocery stores, dollar stores, home builders, and small airlines.
"They have razor-thin margins as it is," Gardner said. As margins start to improve due to lower corporate taxes, deregulation, and increased domestic demand, these companies will see an outsize benefit.
Along a similar vein, smaller manufacturing companies might come out as the biggest winners of the Trump presidency, according to Samuel Rines, macro strategist at WisdomTree.
Rines anticipates that the tariffs will make a compelling case for companies to move their operation to America. He points to Kentucky and Tennessee, two automobile manufacturing hotspots, as signs that American manufacturing is making a comeback. Last year, a major supplier for Ford announced plans to build three facilities in Tennessee. Companies have been gradually reshoring since the pandemic and will have increased incentives to do so under Trump.
Rines also sees room for more of the "higher-end manufacturing," such as chips and other technologies critical to AI development, to move back to the US. The Biden administration passed bipartisan legislation, such as the CHIPS Act, to fund domestic production of semiconductors, and Rines thinks it's unlikely that Trump will halt these popular policies.
Garner and Rines shared some stocks they believe will benefit the most from Trump's proposed tariffs. They are listed below.