"These Stocks Can Fight Through Trump's Trade War"

The trade war initiated by President Trump's broad tariffs against Canada, Mexico, and China has sent shockwaves through global markets. On March 8, 2025, the S&P 500 plummeted by over 1.8 percent, adding to the previous day's 1.8 percent loss, its sharpest decline this year. The Nasdaq Composite index also dropped over 1 percent, entering a correction phase. Investors, spooked by the economic uncertainty, rushed into the safety of government debt, driving the yield on the 10-year Treasury note to its lowest since October. The economic fallout from these tariffs is expected to be severe, with potential long-term effects on global trade and economic relationships.

The sectors most vulnerable to these trade policies include major U.S. automakers such as ford and gm, as well as large retailers like Best Buy and Target. These companies have warned that the new tariffs could increase the prices their customers pay. For example, shares of major U.S. automakers Ford and GM also plunged on Tuesday. So did the shares of Best Buy and Target, as those large retailers warned that the new tariffs could increase the prices their customers pay. This indicates that sectors heavily reliant on imported goods or with significant international supply chains are particularly at risk.

However, not all sectors are equally vulnerable. Historically, utility stocks tend to perform well during periods of market uncertainty. Their low international exposure shields them from currency fluctuations and trade disruptions. For instance, jpmorgan chase analysts suggest that infrastructure expansion prompted in part by tariff-related shifts in domestic production could benefit industrial and utility stocks. Additionally, a stronger US dollar resulting from reduced imports could further dampen inflation, potentially stabilizing interest rates.

The Vanguard Utilities ETF (NYSEMKT: VPU) presents an attractive opportunity for investors looking to capitalize on the resilience of the utilities sector. This index fund includes 69 U.S. utility companies, with a strong focus on electric utilities (61%), multi-utility companies (25%), independent power producers (6%), gas utilities (5%), and water utilities (3%). The ETF has delivered a 21% return over the past three years, underperforming the 40% growth of the S&P 500. However, with tariffs disrupting other industries and AI-driven energy demand on the rise, utilities could be well-positioned to outperform in the coming years. Additionally, utilities posted 16% earnings growth in the last quarter, with a sector-wide valuation of 20 times earnings, suggesting reasonable pricing. The ETF’s expense ratio of 0.09% makes it a cost-effective choice for long-term investors.

Another strategy for investors is to consider structured notes that offer varying levels of upside exposure but with built-in downside protection. For example, contingent coupons with 30% downside barriers and on average seven to nine percent annual coupons paid out monthly can provide an attractive yield while markets do their thing. Maximizing exposure to this within registered accounts has proven to be very beneficial, as notes are not tax efficient.

Investors can also shore up cash levels to have some dry power to boost their equity allocations on any meaningful correction. This strategy, as described by Warren Buffett, uses cash as a tool to take advantage of the inefficiencies in the market, not as a fixed part of his portfolio.

The retaliatory measures from Canada, Mexico, and China in response to President Trump's tariffs have significant implications for the global supply chain and economic relationships. These measures include a 25% tariff on $155 billion of U.S. imports by Canada, and similar actions from Mexico and China. These retaliatory tariffs disrupt the global supply chain by increasing the cost of imported goods, which in turn affects the manufacturing prices and the flow of goods and services across borders. This disruption can lead to reduced trade volumes, decreased corporate profitability, and higher prices for consumers.

The long-term effects on global trade include the disruption of global supply chains, volatility in financial markets, and impact on specific sectors of the economy such as agriculture. For instance, the study by Ejuchegahi Anthony Angwaomaodoko highlights that "disruption of global supply networks is one of trade wars' main economic effects. Tariffs levied by one nation against another may raise manufacturing prices, which has a big impact on international commerce." This disruption can lead to businesses becoming more hesitant to make investments in the nations impacted by trade conflicts, causing the economies of those nations to expand more slowly, which would have an impact on the world economy.

Furthermore, the study indicates that the long-term effects of trade wars and tariff policies on global trading patterns and economic relationships are significant. The paper focuses on the long-term effect of trade wars and tariff policies on global trade and economic relationship between countries. Using historical and modern trade war scenarios such as USA-China trade war, the study indicates that disruption of global supply chain, volatility of financial market, and impact on specific sectors of the country economy such as agriculture are some of the long-term impacts of these policies on global trade. In terms of the impact on economic relationship between countries, the study highlights creation of new trade agreements and diversification of trade partnership as possible effects on economic relationship between countries. It is therefore imperative for countries to diversify their trade relationship by adopting initiatives against the effects of trade war. The study concludes that while national measures could bring some political and economic results in the short term, it is important to note that global prosperity cannot be long-lasting without cooperative and stable international trade policies.