3 Stocks to Buy That Could Protect Your Portfolio From President Donald Trump's Tariffs

In the ever-changing landscape of the stock market, one thing remains constant: uncertainty. And with President Donald Trump's recent imposition of the highest U.S. tariffs since 1910, that uncertainty has reached new heights. The baseline tariff of 10% on all goods brought into the country, along with much higher tariff rates for dozens of specific countries, has sent shockwaves through the economy. China and the European Union have already announced retaliatory measures, and the U.S. Treasury Secretary has warned of potential escalation. So, where do investors turn in such turbulent times?

The answer lies in companies with limited international operations and those that provide essential services or lower-cost substitutes. These companies are better insulated from the direct impacts of tariffs and are likely to weather the storm better than their more exposed counterparts. Here are three stocks that could protect your portfolio amid the Trump tariffs:

1. T-Mobile (NASDAQ: TMUS)

T-Mobile is one of the biggest wireless carriers in the United States, and its share of the market is getting bigger. Its business is insulated from the direct impacts of tariffs, and its services are those most consumers won't give up easily. After merging with Sprint in 2020, T-Mobile has continued to gain market share while extracting synergies from the combination. The result has been a rapid increase in free cash flow, which totaled $17 billion in 2024, up from $13.6 billion in 2023. Management forecasts $17.3 billion to $18 billion in free cash flow this year. For reference, that's better than AT&T (NYSE: T) and roughly in line with Verizon Communications (NYSE: VZ).

T-Mobile appears better positioned than its two biggest competitors. While AT&T and Verizon have offered big promotions on new devices to attract new customers so far in 2025, T-Mobile hasn't been nearly as aggressive. Management's 2025 outlook in January called for nearly as many postpaid subscriber additions this year as last year. That could mean T-Mobile is exhibiting relative outperformance compared to its rivals.

T-Mobile is using most of the cash it generates to return capital to shareholders, primarily through share repurchases, but it instituted a relatively small dividend in 2023 and plans to grow it by about 10% per year. Unlike AT&T and Verizon, it isn't strapped with big piles of debt or committed to a big dividend. That gives management more flexibility to deploy cash strategically, given the opportunity.

Investors will have to pay a premium for the premium company, though. T-Mobile shares trade for an enterprise value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of 11.2. That's well above AT&T (7.4) and Verizon (6.6). But the stock is worth the price, especially in a market where it's protected from much of the political turmoil unfolding.



2. CarMax (NYSE: KMX)

President Trump instituted a 25% tariff on all auto and auto parts imports in late March. As a result, analysts expect the price of new cars to climb anywhere from $3,500 to $16,000, depending on the make and model. That could end up driving strong demand for used cars as a lower-cost alternative. CarMax is the largest used-vehicle dealer in the U.S. It's been operating since 1993, and it brings a different approach to used cars than seen elsewhere. It provides customers with transparency, and its salespeople receive a flat commission on each sale. That provides a great level of trust with customers, which few other car dealerships have been able to match despite efforts to copy its model.

CarMax's long history gives it a significant data advantage as well, which can help it acquire and manage inventory more efficiently than competitors. Instead of targeting a gross margin percentage, CarMax aims to generate a set gross profit per retail unit. Over the last three quarters, it's been able to maintain that level around $2,300 per vehicle. Sticking with that game plan should allow it to continue growing earnings if demand shifts to used vehicles, and CarMax will be able to offer better pricing thanks to its data advantage and business model.

However, the tariffs do come with risk for CarMax. If the policies push the entire economy into a recession, consumers may be more likely to try to hold onto their cars longer instead of buying a "new to them" vehicle. That could offset any increases in demand from higher new car prices. That could prove challenging, as acquisition costs increase while the company maintains significant debt on its balance sheet.

3. Carvana (CVNA 1.43%)

Carvana is one of the best-known names in the used car market. It has modernized the used car buying process, allowing consumers to shop its nationwide inventory online and then delivering those vehicles to their buyers' doors. Global Market Insights expects North America's used car market to grow at an annualized rate of 9% through 2032. Carvana's market-leading growth rate is likely to persist well into the future.

That won't be straight-line growth, mind you. There will be ebbs and flows. Making its results even more erratic is the ebb and flow of the auto lending market, which accounts for a sizable chunk of the company's revenue and per-car gross profit. The slight uptick in used car loan delinquencies and defaults hasn't yet prevented Carvana from being able to sell the loans it's making. But never say never.

Any such slowdown would only be temporary, though, and would be unlikely to rival the sort of prolonged demand for used cars that the newly enacted tariffs will likely create.



In conclusion, while the tariffs imposed by President Trump have created uncertainty and potential economic weakness, there are still opportunities for investors to protect their portfolios. Companies like T-Mobile, CarMax, and Carvana, with their limited international operations and essential services, are well-positioned to weather the storm. As always, it's important to do your own research and consider your risk tolerance before making any investment decisions.