Navigating Tariffs and Trade Wars: How to Invest in a Protectionist Economy

The Trump administration's aggressive tariffs and protectionist policies, now in full force as of June 2025, have reshaped the U.S. economic landscape. With steel and aluminum tariffs soaring to 50% for most nations and reciprocal measures targeting China and the EU, the focus has shifted to sectors that can thrive in this new era of supply chain reshoring, domestic manufacturing booms, and inflation resilience. Below, we dissect the opportunities and risks, offering actionable insights for investors.

The Case for Cybersecurity: Protecting Critical Infrastructure

The tariffs' emphasis on national security has elevated cybersecurity to a strategic priority. As companies shift production back to the U.S., they must safeguard increasingly complex supply chains and industrial systems. The cybersecurity sector stands to benefit from both direct government contracts and private-sector investments in data protection.

Key Plays:
- CrowdStrike (CRWD): A leader in endpoint security, likely to see demand for its cloud-based threat detection as critical infrastructure grows.
- Palo Alto Networks (PANW): Positioned to protect industrial networks amid reshoring efforts.

Investors should monitor this sector for long-term growth, as supply chain resilience becomes non-negotiable.

Commodity Firms: Winners of the Steel and Aluminum Surge

The 50% tariffs on steel and aluminum imports, paired with Section 232 investigations into critical minerals and semiconductors, have created a tailwind for domestic commodity producers. Companies with exposure to industrial metals, rare earth elements, and energy are prime beneficiaries.

Top Picks:
- Nucor (NUE): A domestic steelmaker poised to capture market share as foreign imports decline.
- Freeport-McMoRan (FCX): A copper giant benefiting from infrastructure spending and demand for EV battery materials.

While volatility remains due to global trade tensions, these firms offer inflation protection through pricing power.

REITs: Industrial Real Estate's Golden Age

The push to reshore manufacturing and store goods domestically has fueled demand for industrial space. Industrial REITs, particularly those focused on warehousing and distribution centers, are capitalizing on this shift.

Outperformers:
- Prologis (PLD): The largest global logistics REIT, with high occupancy rates in key U.S. markets.
- ESR (ESRT): A play on e-commerce and supply chain diversification.

Industrial REITs offer both income and growth, as companies like Amazon and Tesla expand U.S. operations.

Beware: Consumer Staples and Labor-Dependent Sectors

Not all industries will weather the protectionist storm. Consumer staples face pressure as input costs rise (e.g., higher aluminum tariffs for soda cans or steel for appliances). Meanwhile, labor-intensive sectors like restaurants or retail may struggle amid wage inflation and supply chain bottlenecks.

• Risk Areas:
• Coca-Cola (KO): Aluminum tariffs could squeeze margins.
• Walmart (WMT): Overexposure to imported goods and inflation-sensitive consumers.

Investors should limit allocations here unless valuations become deeply discounted.

Conclusion: Positioning for a Protectionist Future

The era of Trump's tariffs isn't temporary—it's a structural shift favoring U.S. industries that dominate critical supply chains. Investors should prioritize:
1. Cybersecurity for data protection.
2. Commodity firms with exposure to reshored manufacturing.
3. Industrial REITs for real estate tied to domestic production.

Avoid overexposure to sectors with thin margins or reliance on global labor arbitrage. The key is to align portfolios with the administration's goal: U.S. economic self-reliance.

As tariffs evolve—particularly with potential shifts in UK quotas or China's pharmaceutical tariffs—stay agile. Monitor trade negotiations and Section 232 investigations for further opportunities. In a world of “America First,” these sectors are where capital will find shelter—and growth.