Trump's Tariffs and the Resilience Playbook: Undervalued Industrial and Tech Firms Thriving in Turbulent Trade Times

The Trump administration's 2025 tariff regime has rewritten the rules of global trade, creating a volatile but uneven playing field for U.S. industries. While the average applied tariff rate on imports has surged to 16.8%, the highest since 1943, certain sectors and companies are adapting—and even thriving—by leveraging domestic production, automation, and strategic partnerships. For investors, this environment presents both risks and opportunities, particularly in undervalued industrial and technology firms that are reshaping their supply chains to withstand the new reality.

The Tariff Landscape: Winners, Losers, and the Cost of Protectionism

The Trump tariffs, spanning Section 232, IEEPA, and reciprocal measures, have reshaped key industries. Steel and aluminum tariffs now sit at 50% for most countries (except the UK), while autos and auto parts face 25% levies. A 50% tariff on copper and 200% on pharmaceuticals further complicates the landscape. While these policies aim to shield domestic industries, the Tax Foundation's General Equilibrium Model estimates they could reduce U.S. GDP by 1.0% in the long run. However, the same model shows that companies with agile supply chains and domestic manufacturing capabilities are gaining ground.

The energy sector, for instance, has been hit hard by tariffs on copper and by retaliatory measures from Canada and the EU. Embraer SA, the Brazilian aerospace giant, warns that 50% tariffs on its U.S. imports could cost it $3.6 billion by 2030. Yet, U.S. manufacturers like Fastenal Co. are stabilizing by hiking prices and automating operations. Fastenal's CEO, Dan Florness, notes the market has “stabilized at a lower growth rate,” but the company's 8% revenue lift in 2025—driven by three rounds of price increases—highlights how even mid-sized firms can adapt.

Resilient Sectors: Manufacturing, Semiconductors, and Energy

1. Manufacturing: The Reshoring Revolution
The tariffs have accelerated a shift toward domestic production, with companies like Cra-Z-Art (toy and school supply manufacturer) expanding U.S. operations. The firm recently doubled its production space to 1.5 million square feet, investing in automation to offset labor costs. Lawrence Rosen, Cra-Z-Art's chairman, argues that reshoring “gives us control over our destiny,” a sentiment echoed by other manufacturers navigating the tariff-driven environment.

Similarly, Stellantis (formerly Fiat Chrysler) has revived its Belvidere, Illinois, plant to produce trucks, with operations set to begin in 2027. The automaker's decision to deepen U.S. manufacturing ties reflects a broader trend: companies prioritizing domestic supply chains to avoid retaliatory tariffs and geopolitical risks.

2. Semiconductors: A Strategic Bet on U.S. Tech
The Trump administration's push for semiconductor independence has drawn major players. TSMC, the Taiwanese chip giant, announced a $100 billion investment in U.S. facilities, while Nvidia committed $500 billion to AI chip production in the U.S. These moves align with the CHIPS Act and Trump's goal of reducing reliance on foreign supply chains.

For investors, these commitments signal a long-term shift. TSMC's U.S. expansion, supported by federal subsidies, positions it as a key beneficiary of the tariff-driven reshoring trend. Nvidia's focus on AI, a sector critical to national security and economic growth, further underscores its resilience.

3. Energy: Navigating Tariff-Induced Disruptions
The energy sector faces unique challenges, with tariffs on copper and oil imports disrupting supply chains. However, companies like Siemens Healthineers (a German medical tech firm) are expanding U.S. facilities to mitigate risks. The firm's $150 million investment in domestic operations, accelerated by trade uncertainties, highlights how international firms are adapting to the new normal.

Undervalued Opportunities: The Resilience Playbook

While the tariffs have created headwinds, they've also opened doors for companies with innovative strategies. Here are three key opportunities:

1. Automation-Driven Manufacturers
Firms like Fastenal and Cra-Z-Art are using automation to offset labor costs and tariff-driven inflation. Fastenal's 8% revenue lift in 2025, driven by price hikes and automation, demonstrates how mid-sized manufacturers can thrive. For investors, companies with strong EBITDA margins and a focus on automation are attractive, as they can pass on costs while maintaining profitability.

2. Domestic Semiconductor Foundries
The U.S. semiconductor industry is at a crossroads. While global firms like TSMC and Intel (which has announced a $100 billion investment in U.S. chip production) are leading the charge, smaller players like Amkor Technology (a chip packaging and testing firm) are also benefiting from the reshoring trend. Amkor's stock, currently trading at a discount to its 2023 peak, offers a compelling entry point for investors betting on long-term U.S. tech independence.

3. Energy Infrastructure and Clean Tech
The energy sector's struggles under tariffs have spurred innovation. Japanese automakers like Toyota and Honda are expanding U.S. battery production to bypass tariffs, with Toyota's $13.9 billion North Carolina plant a prime example. These investments align with Trump's push for domestic energy security and position these firms to benefit from both trade policies and green energy incentives.

The Investor Takeaway: Balancing Risk and Reward

The Trump 2025 tariff regime is a double-edged sword. While it risks reducing U.S. GDP by 1.0% and increasing household costs by $1,296 in 2025, it also creates opportunities for companies that can adapt. Investors should focus on firms with:
- Strong domestic supply chains: Prioritize companies that have already reshored production or are investing in automation.
- High pricing power: Firms like Fastenal and Nvidia, which can pass on costs to consumers or secure long-term contracts, are better positioned to weather inflation.
- Strategic partnerships: Collaborations with government agencies or international firms (e.g., Honda and LG Energy Solution) can mitigate trade risks and unlock growth.

In the short term, the industrial and tech sectors will remain in a “sluggish but stabilized” state. However, for those who can identify undervalued companies with resilience strategies, the long-term outlook is promising. As the Tax Foundation's model suggests, while tariffs may slow GDP growth, they also incentivize innovation and domestic production—factors that could redefine the U.S. industrial landscape for years to come.