12 Stocks to Buy Amid Tariff Turmoil

The recent escalation in trade tensions, marked by President Trump's imposition of 25% tariffs on imports from Mexico and Canada, and a doubling of duties on Chinese imports, has sent shockwaves through the U.S. economy. The S&P 500's worst day of the year followed the announcement, and sectors like automakers, home builders, aerospace suppliers, and steelmakers are bracing for significant impacts. However, amidst this turmoil, there are opportunities for savvy investors to capitalize on undervalued stocks. Here, we highlight Honeywell and 11 other stocks that could thrive despite the tariff challenges.



Honeywell: A Diversified Play

Honeywell (HON) is a diversified technology and manufacturing company with a strong presence in aerospace, building technologies, and performance materials. The tariffs on steel and aluminum, as well as those on aerospace components from Canada and Mexico, pose significant challenges. However, Honeywell's diversified portfolio and strong balance sheet position it well to navigate these headwinds.

Honeywell's aerospace division, which produces engines and landing gear, will be particularly affected by the tariffs. Canadian manufacturers produce engines for General Dynamics' Gulfstream and Textron, as well as landing gear for Boeing and Airbus. The increased cost of these components will directly impact Honeywell's bottom line. To mitigate these effects, Honeywell can diversify its supply chain, invest in research and development, negotiate with suppliers, and lobby the U.S. government for exemptions.

Automakers: Ford and General Motors

Ford (F) and General Motors (GM) are among the most vulnerable to the new tariffs. Ford, which has three plants in Mexico and exported nearly 196,000 cars to North America in the first half of 2024, is particularly at risk. The new duties on imports from Mexico and Canada could cost Ford about $6 billion, or roughly 75% of its EBITDA. General Motors, which produces electric vans, the Chevrolet Silverado Heavy Duty truck, and the V8 engine and dual clutch transmission in Canada, could face about $14 billion in costs.

However, these challenges also present opportunities. Ford and General Motors could benefit from increased domestic production and innovation in electric vehicles. Investors should keep an eye on these companies' strategies to mitigate tariff impacts and capitalize on emerging trends in the automotive industry.

Home Builders: Lennar and PulteGroup

Home builders like Lennar (LEN) and PulteGroup (PHM) are also likely to see an increase in costs from the new tariffs. The PHLX Housing index has shed about 4.8% so far this year. Tariffs on finished products such as appliances, electronics, cabinets, and fixtures from Mexico and China can further increase the cost of building a home. This could create opportunities for companies that can provide cost-effective domestic alternatives or innovative building materials.

Lennar and PulteGroup have strong balance sheets and a history of navigating economic challenges. Investors should consider these companies as potential beneficiaries of a shift towards domestic manufacturing and innovation in the housing sector.

Aerospace Suppliers: Boeing and Textron

Canada is the U.S.' top import country and third-largest export country for aerospace by dollar value. The tariffs could raise costs for already-stressed suppliers and their planemaking customers such as Boeing (BA) and Textron (TXT). Canadian manufacturers produce engines for General Dynamics' Gulfstream and Textron, as well as landing gear for Boeing and Airbus. Mexico has fast-growing aerospace hubs in Queretaro and Chihuahua, attracting large suppliers, including Honeywell.

Boeing and Textron could benefit from increased domestic production and innovation in aerospace technologies. Investors should consider these companies as potential beneficiaries of a shift towards domestic manufacturing and innovation in the aerospace sector.

Steelmakers: U.S. Steel and Nucor

Steel imports accounted for about 23% of U.S. steel consumption in 2023, with Canada, Brazil, and Mexico being the largest suppliers. Canada, whose abundant hydropower resources aid its metal production, accounted for nearly 80% of U.S. primary aluminum imports in 2024. Aluminum producer Alcoa (AA) said last month that Trump's plan to impose a tariff could cost about 100,000 U.S. jobs and would itself not be enough to entice it to boost production in the country. Its shares have slumped 17% so far in 2025.

U.S. Steel (X) and Nucor (NUE) could benefit from increased domestic production and innovation in steel and aluminum technologies. Investors should consider these companies as potential beneficiaries of a shift towards domestic manufacturing and innovation in the steel and aluminum sectors.

Conclusion

The recent tariff escalations present significant challenges for many sectors, but they also create opportunities for companies that can adapt and innovate. Honeywell, Ford, General Motors, Lennar, PulteGroup, Boeing, Textron, U.S. Steel, and Nucor are well-positioned to navigate these headwinds and capitalize on emerging trends. Investors should consider these companies as potential beneficiaries of a shift towards domestic manufacturing and innovation in their respective sectors.