Trade Winds Shift: Navigating Tariff Turbulence for Big Gains

Wesley ParkThursday, May 29, 2025 9:51 pm ET
151min read

The U.S. trade landscape is in upheaval! A

court ruling has gutted Trump's IEEPA tariffs, while the specter of 15% Section 122 tariffs looms. This is a defining moment for investors to pivot into sectors poised to profit from regulatory chaos—or get crushed by it. Let's break it down.

The Golden Opportunity: Consumer Discretionary Stocks Are Set to Soar

The invalidation of IEEPA's 10-25% “Liberation Day” tariffs is a game-changer for retailers and consumer-facing companies. Take Walmart (WMT) or Target (TGT): these giants had been absorbing $950/yr in tariff-driven cost increases per household. With IEEPA's broad levies now gone, margins are set to explode.

This isn't just about cheaper imports. Lower input costs will free up cash for stores to invest in e-commerce, automation, or even dividends. The sector's P/E ratio is still undervalued compared to tech—this is your moment to load up.

Industrials: Play the Section 232 Tariff Expansion

While IEEPA is dead, Section 232's 25% steel/aluminum tariffs remain intact—and could expand. The administration's new “inclusions process” (launched April 30) lets U.S. manufacturers push for tariffs on more aluminum derivatives—from soda cans to car parts.

This creates a sweet spot: Buy steelmakers now. Their margins are already fat, and if the Commerce Dept adds new products to the protected list, shares could soar. Plus, the U.S.-UK trade deal (lowering tariffs on British steel) hints at selective carve-outs that could boost exports.

Beware the Volatility: Tech and Autos Are Minefields

Not all sectors are winners. Auto stocks (GM, F, TM) face a double whammy: Section 232's 25% tariffs on imported vehicles and the risk of retaliatory measures from Canada/EU. Meanwhile, semiconductors (AMD, NVDA) are caught in the crossfire of Section 232 investigations into chip imports.

These sectors could see wild swings as the Section 122 tariffs (limited to 150 days) come and go. Stay on the sidelines until clarity emerges—or short them if you're bold.

The Tactical Play: Shift to Short-Term Bonds to Hedge Inflation

With tariffs still contributing to 0.6% annual inflation, don't ignore bonds. Opt for 3-5 year Treasuries (TLH) or high-yield corporates (HYG) to lock in yields above 5% while shielding against volatility. Pair this with equity bets in industrials/consumer discretionary for a balanced attack.

Action Plan: Deploy Now Before the Rally Fades

  1. Buy WMT/TGT: Aim for a 15% return as margins rebound.
  2. Load up on NUE/STLD: Target 20% gains if new tariffs expand.
  3. Avoid auto/tech stocks until Section 122's fate is clear.
  4. Hedge with TLH: Protect against inflation spikes.

This is no time for hesitation. The regulatory pendulum has swung—act fast before the trade winds shift again.

Bottom Line: Tariffs may be chaotic, but they're also a roadmap to profits. Follow the data, stay tactical, and don't miss this ride.