Navigating G7 Trade Turbulence: Investing in Sectors That Thrive Amid Protectionism

The G7 faces its most volatile trade environment since the 2018 tariff wars, as U.S. President Donald Trump’s escalating tariffs on allies threaten to derail global supply chains and economic stability. Yet within this turmoil lies a critical opportunity: sectors shielded by government support, structural demand, or geopolitical necessity are primed to outperform. For investors, the key is to identify industries resilient to protectionism—and act swiftly before others capitalize on these asymmetries.

1. Automotive & Materials: Playing Defense with Strategic Diversification

The automotive sector is ground zero for the U.S.-Canada tariff war, with 25% levies on cars and parts. While U.S. giants like Ford (F) and General Motors (GM) face margin pressure, Canadian firms like Magna International (MG) and Linamar (LNR.TO) are beneficiaries of Ottawa’s $40 billion liquidity program. These companies are accelerating production within Canada to bypass U.S. tariffs, making them ideal long positions.

Meanwhile, U.S. steel producers like Nucor (NUE) and Allegheny Technologies (ATI) face retaliatory tariffs from Canada and the EU, while Canadian firms such as Alcan (ACB.TO) enjoy government-backed financing to scale up.

Investment Play: Short U.S. automakers exposed to retaliatory tariffs and long Canadian manufacturers with liquidity support.

2. Energy & Renewables: Betting on Green Resilience

The EU’s Carbon Border Adjustment Mechanism (CBAM) and U.S. Green Steel Act (GASSA) are creating winners in clean energy. While fossil fuel-dependent firms like Exxon (XOM) or Shell (RDSA) face compliance costs, renewable players such as NextEra Energy (NEE) and Canadian Solar (CSIQ) are positioned to capitalize on subsidies for low-carbon infrastructure.

The G7’s push for energy security also favors companies like Cree (CREE) (LED technology) and Siemens Gamesa (SGRE) (wind turbines), which benefit from diversification away from Russian oil and gas.

Investment Play: Load up on green energy stocks with direct ties to G7 climate policies and CBAM compliance.

3. Tech & Defense: The Unshaken Pillars of Global Trade

AI-driven sectors and defense contractors are proving impervious to trade wars. Companies like NVIDIA (NVDA) and C3.ai (AI) are insulated by their irreplaceable roles in supply chain automation and national security. Similarly, defense giants like Lockheed Martin (LMT) and Northrop Grumman (NOC) are benefiting from G7 nations’ increased military spending amid geopolitical tensions.

The U.S.-Japan Digital Trade Agreement, finalized in April 2025, also shields tech firms from data localization laws, making Microsoft (MSFT) and Amazon (AMZN) key holdings for cross-border resilience.

Investment Play: Allocate to AI leaders and defense contractors, which thrive on geopolitical instability and digital sovereignty demands.

4. Currency Plays: Short CAD, Long USD

The Canadian dollar (CAD) has weakened 8% against the U.S. dollar since January 2025 due to trade deficits and retaliatory tariffs. Investors can capitalize by shorting CAD via ETFs like FXC or directly trading USD/CAD pairs. Conversely, U.S. firms with CAD-denominated revenues, such as Procter & Gamble (PG), gain pricing power.

Investment Play: Short CAD exposure and pair it with U.S. multinationals benefiting from a stronger dollar.

5. The Geopolitical Hedge: Gold and Infrastructure

Gold (GLD) remains a safe haven in times of trade uncertainty, with geopolitical risks pushing prices toward $2,500/oz. Meanwhile, G7 infrastructure initiatives—like Canada’s $100 billion “Build Back Better” plan—are fueling demand for companies like Bechtel (BEPC) and Brookfield Infrastructure (BEP).

Investment Play: Use gold as a portfolio hedge and invest in infrastructure firms tied to G7 fiscal spending.

Conclusion: Act Now Before the Divide Widens

The G7’s unity is fraying, but its most resilient sectors are emerging stronger. Automotive firms in Canada, green energy leaders, tech/defense titans, and currency plays offer asymmetric upside. The window to capitalize is narrowing—act now to position your portfolio for the post-tariff world.

The next 12 months will separate the winners from the victims of protectionism. Are you investing in resilience—or betting against it?

Time to move.