Fortress Industries: How U.S. Domestic Champions Are Thriving in a World of Trade Wars

The global economy is bracing for the aftershocks of escalating trade tensions, but not all sectors are retreating. Amid rising tariffs and geopolitical risks, domestically focused industries like steel manufacturing and tech-driven enterprises are proving their resilience—thanks to strong domestic revenue streams, strategic operational pivots, and reduced reliance on global supply chains. Recent Q2 profit trends and Federal Reserve commentary reveal a compelling investment thesis: companies rooted in U.S. markets are primed to outperform in this volatile environment.

The Steel Sector: Tariff Winds in Favor

The U.S. steel industry is experiencing a renaissance, fueled by Section 232 tariffs that have slashed foreign competition and boosted domestic pricing.

Nucor (NUE) and U.S. Steel (X) are leading the charge. Nucor's hot-rolled coil (HRC) prices surged 21.6% since July 2024, while U.S. Steel's Q2 EBITDA is projected to jump 147% year-over-year to $425 million, driven by its $2.5 billion Big River 2 (BR2) mini-mill. This facility's record shipments and 10% EBITDA margin in Q1 2025 underscore the sector's operational efficiency gains.

Why now?
- Tariff tailwinds: Eliminating exemptions on Canadian and Mexican imports reduced competition by 33.5%, allowing price hikes.
- Infrastructure boom: The 2021 Infrastructure Act's $650 billion spending—coupled with strict “Buy America” rules—has boosted demand for construction-grade steel.
- Green steel premiums: Companies like Nucor are capitalizing on $15–30/ton premiums for sustainable steel, aligning with ESG trends.

The Federal Reserve's Q2 analysis acknowledges this sector's strength, noting that domestic steel producers are “weathering trade headwinds better than expected” despite rising scrap costs.

Tech's Domestic Edge: Data, Defense, and AI

While global supply chains have rattled many tech firms, companies with U.S.-centric revenue models—like Palantir (PLTR)—are thriving.

Palantir's Q2 results highlight its focus on domestic markets:
- Revenue jumped 39% year-over-year to $315 million, driven by 45% growth in U.S. government contracts and 71% gains in commercial sales.
- AI-driven solutions: Palantir's software for logistics, cybersecurity, and urban planning is critical to federal agencies and Fortune 500 firms seeking to reduce reliance on foreign data ecosystems.

Other tech firms are pivoting strategically:
- Microsoft (MSFT) and Alphabet (GOOGL) are scaling cloud infrastructure to support domestic businesses, with Azure and Google Cloud growing 33% and 28% year-over-year, respectively.
- NVIDIA (NVDA), despite H20 chip export restrictions in China, is redirecting resources to U.S. AI supercomputing projects. Its Q2 revenue guidance of $45 billion (excluding $8 billion in lost Chinese sales) reflects a domestic-first strategy.

The Fed's Q2 statements note that AI and cloud investments are “a rare bright spot” for productivity, even as broader GDP growth slows.

Risks? Yes. But the Reward/Risk Ratio Favors These Sectors

Trade tensions pose clear threats:
- Input costs: Steel's scrap prices are up 38% year-over-year, and tech faces rising semiconductor costs.
- Global demand slowdowns: The Fed warns of a widening output gap and potential recession risks.

Yet these sectors are positioned to mitigate these risks:
- Vertical integration: Steel firms like Cleveland-Cliffs are acquiring scrap processors to stabilize costs.
- Domestic demand insulation: Tech companies focused on U.S. government and enterprise clients (e.g., Palantir) are less exposed to global trade cycles.

The Fed's Q2 inflation forecasts also hint at an advantage: tariff-driven price hikes have yet to derail consumer spending on steel-heavy sectors like autos (SAAR >16.5M) or commercial construction.

Invest Now: Target These Sectors

The data is clear: domestic champions are outperforming.

• Steel: Buy Nucor (NUE) and U.S. Steel (X) ahead of Q2 earnings. Both stocks trade at 7–9x forward EV/EBITDA, below their 10-year averages.
• Tech: Palantir (PLTR) offers a compelling mix of growth (39% revenue rise) and valuation (15x forward P/E). Microsoft (MSFT) and NVIDIA (NVDA) remain core holdings for their cloud/AI dominance.

Act now: The Fed's Q2 commentary signals that trade tensions will persist, but domestic-focused firms are the safest bets to navigate—and profit from—the storm.

The time to invest in fortress industries is now.