Strategic Sectors to Capitalize on Post-Trump Tariff Relief: Where to Bet on Trade Recovery

The era of relentless trade wars under the Trump administration has given way to a tentative thaw in global trade relations. With tariff reductions and exemptions now in play across key industries, investors face a critical inflection point: which sectors are poised to rebound, and which companies are best positioned to capitalize on the easing of cross-border barriers? The answer lies in sectors like automotive, advanced manufacturing, and tech—industries where companies with strong cash reserves and diversified supply chains are set to thrive. But proceed with caution: lingering risks, including sector-specific tariffs and a fragile global economy, remain. Here’s how to navigate the opportunities—and avoid the traps.

The Automotive Sector: A Turnaround in Sight

The automotive industry has been one of the hardest-hit sectors by years of punitive tariffs. But recent developments, particularly the U.S.-UK trade deal, signal a potential revival. Under the agreement, tariffs on imported vehicles from the UK dropped from 25% to 10% on the first 100,000 vehicles annually. This reduction, coupled with the elimination of steel and aluminum tariffs on UK imports, directly benefits automakers like Ford (F) and General Motors (GM), which rely on transatlantic supply chains.

The broader shift toward bilateral trade deals and tariff reductions is also unlocking opportunities for U.S. automakers exporting to Canada and Mexico. Companies like Tesla (TSLA), which have aggressively diversified their supply chains and secured exemptions under the USMCA agreement, are particularly well-positioned. The U.S. auto industry’s recovery hinges on reducing reliance on single-source suppliers—a strategy Tesla has mastered, with its global network of battery suppliers and factories in Texas and Germany.

Tesla’s stock has outperformed rivals amid its supply chain agility, rising 60% since mid-2021 despite macroeconomic headwinds.

Tech: The Electronics and Semiconductor Rebound

The tech sector has long been collateral damage in trade wars, but recent tariff exemptions for electronics components—like those announced in April 2025—mark a turning point. Companies such as Advanced Micro Devices (AMD) and Intel (INTC), which depend on global semiconductor supply chains, now face reduced costs for critical inputs. The U.S. government’s decision to exempt electronics from “reciprocal” tariffs as high as 125% has stabilized pricing for chips and devices, shielding margins from further erosion.

Meanwhile, the $43 billion CHIPS and Science Act, passed in 2022, is starting to bear fruit. U.S. semiconductor manufacturers are ramping up domestic production, reducing reliance on Asian suppliers. Applied Materials (AMAT), a key supplier of semiconductor manufacturing equipment, stands to benefit as companies like TSMC and Samsung expand U.S. operations.

AMD has surged 40% since early 2024, outperforming the broader market as trade tensions ease for tech firms.

Export-Driven Industries: Betting on Trade Liberalization

The agricultural and energy sectors, which were collateral damage in the China-U.S. trade war, now see glimmers of hope. A 90-day pause on China’s retaliatory tariffs in May 2025 reduced the punitive 125% rate back to 10%, offering respite to farmers and energy exporters. Companies like Deere (DE), which supplies agricultural machinery, and Chevron (CVX), an energy giant with global operations, are critical beneficiaries.

The U.S.-UK trade deal’s elimination of steel tariffs also lifts the burden on industrial manufacturers like Caterpillar (CAT), which relies on steel for construction equipment. Caterpillar’s recent pivot to sourcing steel from Canada and Mexico under USMCA-compliant terms has insulated it from volatility.

Caterpillar’s revenue grew at a 7% annualized rate from 2021 to 2024, driven by diversified supply chains and trade exemptions.

The Risks: Linger, Don’t Linger

While the outlook is brighter, risks remain. First, the China tariff pause is temporary, and broader disputes over technology and intellectual property could reignite tensions. Second, sector-specific tariffs persist: steel and aluminum imports from non-USMCA partners still face 25% levies, while some automotive tariffs remain layered. Third, the Tax Foundation’s warning that the average U.S. tariff rate remains at 12.1%—a 70-year high—underscores that trade barriers are still elevated.

Investors should avoid companies with single-market exposure or reliance on China-only supply chains. Boeing (BA), for instance, still faces hurdles due to lingering tariffs on aerospace parts, while 3M (MMM), a diversified industrial giant, has fared better by leaning on USMCA-aligned production in Canada and Mexico.

The Investment Playbook: Go Long on Resilience

To capitalize on post-Trump tariff relief, focus on companies with three traits:
1. Strong cash reserves to weather uncertainty.
2. Diversified supply chains across multiple regions.
3. Exposure to USMCA/UK trade deals.

Top picks:
- Tesla (TSLA): Global supply chain and USMCA compliance give it a stranglehold on EV demand.
- Caterpillar (CAT): Industrial leader with diversified sourcing and exposure to North American trade deals.
- Applied Materials (AMAT): Critical to the U.S. semiconductor renaissance.
- Deere (DE): Agricultural machinery leader benefiting from export liberalization.

For broader exposure, consider the Industrial Select Sector SPDR Fund (XLI), which tracks companies like these, or the VanEck Vectors Semiconductor ETF (SMH).

Final Call: Act, but Don’t Overcommit

The post-Trump trade environment is a mixed bag: sectors like automotive and tech are primed for recovery, while risks like China’s volatility and high tariffs linger. Investors should take measured long positions in resilient companies but avoid overexposure to sectors still in the crosshairs. The era of trade wars may not be over, but the smart money is already placing bets on the winners of the thaw.

Both funds have outperformed the S&P 500 by 15% since early 2024, signaling investor confidence in trade-sensitive sectors.