Trade Tensions and Tariffs: Navigating Sector Risks and Opportunities in a Post-Trump World

The Trump administration's proposed 10–15% tariffs on over 150 countries—alongside sector-specific levies as high as 200%—are poised to reshape global trade dynamics. For investors, the coming months will test the resilience of supply chains, favor domestically oriented industries, and create entry points in undervalued commodity-linked equities. This analysis explores vulnerabilities in sectors like semiconductors and steel, while identifying opportunities in agricultural pivots and domestic manufacturing plays.

Supply Chain Vulnerabilities: Semiconductors and Steel

The semiconductor sector faces a dual challenge. Proposed tariffs of 20–40% on imports from countries like China and Vietnam could disrupt just-in-time supply chains, forcing companies to restructure production or absorb costs. . Firms reliant on Asian manufacturing—such as those in the auto and tech industries—may struggle with rising input costs.

Historical parallels suggest caution: the 2018 Section 232 tariffs on steel imports caused temporary shortages, boosting domestic producers like Nucor (NUE) but also triggering retaliatory measures. Today's broader tariffs risk a similar outcome. .

Actionable Insight: Underweight semiconductor firms with heavy Asian exposure (e.g., Advanced Micro Devices, AMD) and overweight domestic manufacturers with tariff-exempt status under trade pacts like USMCA.

Steel: A Domestic Play with Counter-Tariff Risks

U.S. steel producers could see short-term gains as tariffs on imports from China, Vietnam, and the EU increase to 34–50%. Companies like Steel Dynamics (STLD) or U.S. Steel (X) may benefit from reduced foreign competition. However, the EU's $84B counter-tariff threat—targeting U.S. agricultural exports—adds uncertainty.

The 2002 steel tariffs offer a cautionary tale: domestic prices spiked 30%, but global backlash led to WTO sanctions and a eventual reversal. . Investors should balance near-term gains against the risk of prolonged trade conflicts.

Actionable Insight: Overweight U.S. steel equities but hedge with long positions in ETFs tracking global steel demand (e.g., SLX), which may stabilize as supply tightens.

Agricultural Exports: Pivot to Domestic Markets or Diversify

The EU's counter-tariffs—targeting $84B in U.S. goods, including agricultural products—threaten to reduce export volumes. Corn, soy, and dairy producers may face price declines as overseas sales shrink.

However, domestic demand could provide a buffer.

. Companies with diversified export markets (e.g., Tyson Foods, TSN) or those investing in domestic processing (e.g., Bunge, BG) may outperform.

Actionable Insight: Underweight pure-play export-heavy agribusiness stocks (e.g., Deere, DE) and overweight firms with domestic or Asian export exposure (e.g., Archer-Daniels-Midland, ADM).

Commodity-linked Equities: Copper and the Undervalued Metals Sector

The 50% tariff on copper imports and Section 232 investigations into critical minerals create a mixed picture. While U.S. copper miners (e.g., Freeport-McMoRan, FCX) gain from reduced foreign competition, global price pressures could weigh on equities.

Historically, tariffs on commodities like steel and aluminum led to short-term price spikes but long-term oversupply as global producers adapted. . Investors should focus on miners with low-cost domestic operations or exposure to untaxed regions.

Actionable Insight: Overweight copper ETFs (e.g., COPX) and undervalued miners with U.S. reserves, while avoiding those reliant on Chinese imports.

Historical Precedent: Lessons from Past Tariffs

The 2018 Section 232 tariffs on steel and aluminum caused a 10% spike in U.S. manufacturing costs but also spurred domestic production. Similarly, the 2002 steel tariffs led to a 12-month rally in domestic steel stocks before global retaliation erased gains. Today's broader scope—150+ countries and 200% pharma tariffs—suggests prolonged volatility.

Final Investment Strategy

Sector Allocations (as of July 2025):
1. Overweight:
- Domestic steel manufacturers (e.g., NUE, X)
- U.S.-focused copper miners (e.g., FCX)
- Agricultural firms with diversified markets (e.g., ADM)

1. Underweight:
2. Global semiconductor firms with Asian supply chains (e.g., AMD, INTC)

3. Pure-play agricultural exporters (e.g., DE)

4. Hedging:

5. Long positions in global steel ETFs (SLX) to offset counter-tariff risks.
6. Short volatility in commodity sectors to capitalize on price swings.

The coming months will test investors' ability to navigate policy-driven disruptions. By focusing on domestic resilience and undervalued commodity plays, portfolios can capitalize on the shifting trade landscape.