Stocks to Watch as Tariffs Reshape the Economy

The recent announcement by President Donald Trump of a reciprocal tariff plan on April 2, 2025, has sent shockwaves through the global economy. These new tariffs, which include a 10% tax on all U.S. trading partners and even higher rates on 60 countries, are set to take effect no later than April 9. The impact on various sectors is expected to be profound, with investors scrambling to find stocks that can weather the storm. Here, we highlight two companies that analysts believe could not only survive but thrive in this new tariff landscape.

The Impact of Tariffs on the Economy

The tariffs, which approach 50% for countries like Vietnam and Cambodia, are expected to drive up costs for U.S. consumers and businesses alike. Key trading partners like China and the European Union are also in the crosshairs, with the U.S. levying a new 34% reciprocal tariff on China and 20% on the EU. These tariffs come on the heels of a newly levied 25% tariff on all imported cars and car parts, further complicating the economic landscape.

Investors have reacted negatively, with the S&P 500 Index ($SPX) down nearly 4.3% and the CBOE Volatility Index ($VIX) approaching a 31% gain. The widespread tariffs will impact publicly traded companies across all sectors and industries, forcing them to decide whether to absorb the higher costs or pass them on to consumers. Companies that choose the latter path will likely face reduced consumer spending and potentially weak appetites for higher-priced imported goods.

Stock to Buy #1: TJX Companies

While analysts warn that retailers will broadly be impacted by tariffs, TJX Companies (TJX) stands out as a potential winner. The parent company of off-price brands like TJ Maxx and Home Goods could benefit as other retailers ditch inventory due to higher costs, leaving TJX with more desirable surplus options to sell to its customers.

Adding confidence to this recommendation is TJX’s stock performance on April 3, 2025. As of this writing, shares are up slightly, vastly outperforming the red in the broader market. Over the past year, shares are up 29.2%, and the company is currently trading at a forward price-earnings ratio of 27.7x, which, while steeper than the industry average, represents a significant discount to its 5-year average. TJX stock is also slightly off its 52-week high, creating a bit of a discount for investors now.

Plus, the rest of Wall Street agrees with this assessment. TJX has a consensus “Strong Buy” rating from 22 analysts, and an average price target of $140.22. While this implies just 12% upside potential over the next 12 months, investors may prefer opting for conservative gains than the selloff and volatility in the broader market.

Stock to Buy #2: Carvana

The automotive industry is one of the hardest hit by the new tariffs, with a 25% tax on all imported cars and car parts. However, this could doubly benefit used car retailer Carvana (CVNA). Consumers are likely to opt for used cars as new models become more expensive, and Carvana sources its inventory from the U.S., helping it avoid import tariffs that will impact several other companies like Ford (F) and General Motors (GM) in the auto space.

Carvana has been another outperformer over the past year, with returns of 134%. The stock has not been as solid in the year to date, with a loss of 5%, including a brutal 17% drop on April 3. However, there is still a lot for investors to like. 2024 was a “comeback” year for the used car retailer, delivering a 33% increase in retail units sold and posting four straight quarters of positive net income. In the fourth quarter, its revenue surged 46% to $3.55 billion, and its earnings per share of $0.56 dramatically beat its loss of $1 per share in the prior-year period.

The company did report some quarter-over-quarter weakness in its revenue per unit sold, which analysts say is to be expected with its cyclical business. With new car prices set to surge and more demand for used cars anticipated, CVNA could start to see an improvement in those metrics.

Plus, analysts are a fan of the stock, with a consensus “Moderate Buy” rating. The average price target of $280 implies more than 50% upside potential over the next 12 months.

Visualization of Tesla's Stock Price Changes



Conclusion

While the new tariffs pose significant challenges for many sectors, companies like TJX and Carvana are well-positioned to navigate the economic headwinds. TJX’s ability to source desirable surplus inventory and its strong stock performance position it well, while Carvana’s shift to used cars and domestic sourcing strategy could drive positive stock performance. However, both companies face risks related to higher costs, reduced consumer spending, and increased competition.

As the economic landscape continues to evolve, investors will need to stay vigilant and adapt their strategies to the changing environment. Companies that can innovate and pivot in response to these challenges will be the ones that emerge stronger on the other side.