The Best Stocks To Invest In During a Tariff War

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With tariffs against Mexico, Canada, and China now in effect, investors are seeking the best stocks to own that can withstand the volatility of a trade war. President Donald Trump’s aggressive tariff policies have reshaped market conditions, forcing investors to shift toward stocks that are less exposed to global trade disruptions. Experts highlight defensive sectors, low-volatility stocks, and companies benefiting from protectionist policies as the top picks for uncertain times.

Why Some Stocks Perform Better in a Trade War

Trade wars create uncertainty, often leading to higher market volatility. Companies that rely on international supply chains and exports typically suffer, while businesses focused on domestic markets or essential services tend to hold up better. Defensive stocks, such as healthcare and utilities, provide stability since demand for their services remains steady regardless of economic conditions. Meanwhile, companies with strong share buyback programs and low debt levels often outperform in turbulent markets.

Expert Picks for the Best Stocks to Own

Analysts have identified several best stocks to own amid growing trade tensions. Healthcare stocks, including AbbVie, UnitedHealth Group, and Centene, are leading choices due to their resilience during economic downturns. These companies do not rely on imported goods, making them less vulnerable to tariffs. The healthcare sector has already outperformed in 2025, with an 8% year-to-date gain, and AbbVie has surged 17% following strong earnings.

Technology giant Apple has also emerged as a defensive pick. Although Apple’s stock has dropped 4.7% this year, analysts view it as a safer bet among the “Magnificent Seven.” The increasing demand for artificial intelligence and the potential for a new iPhone upgrade cycle could provide long-term upside. Defense contractors like Lockheed Martin and Booz Allen Hamilton are another group of best stocks to own in a trade war. These companies are largely dependent on government contracts rather than consumer demand, making them more resilient during market downturns.

The Impact of Tariffs on Market Performance

The S&P 500, Nasdaq, and Dow Jones all dropped about 2% after Trump’s latest tariffs took effect. Historically, similar policies in 2018 triggered market turbulence but also created opportunities for investors to shift into safer assets. Defensive stocks outperformed in past trade wars, and analysts believe the same trend will hold in 2025.

Beyond individual stocks, some strategists suggest that US Treasurys and dividend-paying utility stocks could be smart choices. Companies like American Electric Power (AEP) provide essential services and have predictable revenue streams. AEP’s planned $54 billion investment in energy infrastructure could make it a stable long-term bet.

Who Wins and Loses in the Current Trade War?

While some sectors benefit, others face significant headwinds. Industries relying heavily on global supply chains, such as auto manufacturing, IT hardware, and e-commerce, are among the hardest hit. The auto industry, in particular, faces rising costs as supply chains between the US, Canada, and Mexico are deeply intertwined. With tariffs adding up at multiple production stages, vehicle prices are likely to rise, leading to lower consumer demand.

Conversely, mid-cap industrials and financial services firms with a domestic focus could benefit from Trump’s protectionist stance. Experts suggest that best stocks in these categories will likely outperform those tied to international trade.

Should You Adjust Your Portfolio?

Investors looking to navigate this uncertain environment should focus on companies with strong balance sheets, steady cash flow, and minimal reliance on international supply chains. While trade wars create volatility, they also present opportunities to shift toward stocks that can weather the storm.

Which sector offers the best stocks to own during a trade war? Tell us what you think!

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