How Companies Can Adapt to Ongoing Trade Tariffs

Shift Supply Chains Domestically or to Non-Tariffed Regions

Companies heavily reliant on imports subject to tariffs (e.g., from China, Canada, or Mexico) can reduce costs by sourcing materials or manufacturing domestically

This requires upfront investment but can enhance long-term resilience.

Pass Costs to Consumers or Absorb Margins

Firms may raise prices to offset tariff costs, though this depends on pricing power and consumer demand elasticity. Companies with strong brands or essential goods (e.g., consumer staples) are better positioned to pass costs along. Alternatively, those with robust margins might absorb costs temporarily to maintain market share, especially in competitive sectors like retail or tech.

Diversify Revenue Streams

Companies can reduce exposure to tariff-impacted markets by expanding into unaffected regions or focusing on domestic sales. For instance, a manufacturer exporting to the U.S. might pivot to growing markets in Southeast Asia or Europe if retaliatory tariffs hit their primary revenue sources.

Increase Operational Efficiency

To counteract rising input costs, companies can cut operational expenses through automation, renegotiating supplier contracts, or optimizing logistics. This helps maintain profitability even under tariff pressure.

Leverage Tariff Exemptions or Negotiations

Some firms may lobby for exemptions or benefit from trade negotiations that soften tariff impacts. Staying agile and monitoring policy shifts—like the recent one-month reprieve for USMCA goods announced on March 5, 2025—can provide temporary relief or strategic openings.

Which Stocks to Consider for Investment

Tariffs create winners and losers depending on a company’s exposure to global trade, supply chain structure, and market focus. Here are categories and characteristics of stocks that may perform well amid ongoing trade tariffs, based on their adaptability and resilience:

Domestically Focused Companies

Why: Firms sourcing, producing, and selling primarily in the U.S. face less disruption from import tariffs or retaliatory measures.

Examples of Sectors: Utilities, healthcare, consumer staples, and domestic manufacturers.

Stock Characteristics: Look for companies with low foreign revenue exposure and minimal reliance on imported inputs. Examples might include U.S.-based utility providers or firms like Waste Management (WM), which operates largely within the U.S.

Consumer Staples

Why: These companies sell essential goods (e.g., food, beverages, household products) with steady demand, giving them pricing power to pass on tariff costs. Many have domestic production capabilities.

Examples of Sectors: Food producers, beverage companies, household goods.

Stock Characteristics: Seek stable, dividend-paying firms like Procter & Gamble (PG) or Hormel Foods (HRL), which have strong domestic footprints.

Defense and Infrastructure

Why: Tariffs often accompany policies favoring domestic manufacturing and national security, boosting defense and infrastructure spending. European defense stocks have surged in 2025 due to increased budgets, and U.S. firms could follow suit.

Examples of Sectors: Aerospace, defense contractors, construction equipment.

Stock Characteristics: Companies like General Dynamics (GD) or Caterpillar (CAT) may benefit from domestic focus and government contracts.

Technology with Low Tariff Exposure

Why: Software and cybersecurity firms often deliver digital products, avoiding physical trade barriers. Hardware-focused tech firms with flexible supply chains (e.g., shifting from China to India) can also adapt.

Examples of Sectors: Software, cloud computing, cybersecurity.

Stock Characteristics: Look for firms like Microsoft (MSFT) or CrowdStrike (CRWD) with minimal import reliance. Amazon (AMZN) has been noted for “limited tariff risk” due to its diversified model.

Commodities and Safe Havens

Why: Tariffs increase market uncertainty, driving demand for assets like gold that hedge against volatility and inflation. Domestic commodity producers may also gain if tariffs reduce foreign competition.

Examples of Sectors: Precious metals, domestic steel or energy.

Stock Characteristics: Consider gold ETFs like SPDR Gold Shares (GLD) or U.S.-focused producers like Nucor (NUE) in steel.

Companies with Strong Supply Chain Flexibility

Why: Firms that can quickly reroute supply chains to avoid tariffs (e.g., from China to Vietnam) or have diversified sourcing are more resilient.

Examples of Sectors: Retail, manufacturing, industrial goods.

Stock Characteristics: Large-cap firms like Home Depot (HD) or Deere & Company (DE) with adaptive logistics may outperform import-heavy peers.

Stocks to Approach with Caution

Import-Dependent Retailers: Companies like Wayfair (W), Best Buy (BBY), or Etsy (ETSY) face direct tariff hits and discretionary spending risks as consumer costs rise.

Export-Heavy Manufacturers: Firms reliant on exports to tariffed markets (e.g., automakers shipping to China) may struggle with retaliatory measures.

Ad-Tech and Cyclical Tech: Stocks like Trade Desk (TTD) or Snap (SNAP) could see budget cuts if corporate spending tightens.