On February 1, 2025, President Donald Trump announced significant tariff measures targeting imports from Canada, Mexico, and China.
While the tariffs on Canada and Mexico have been temporarily delayed, a 10% tariff on Chinese imports went into effect on February 4.
Despite being heavily broadcast in advance, the news still managed to shake the market, as investors worry about everything from supply chain disruptions across sectors… to a new trade war.
The S&P 500 and Nasdaq both pulled back 2% on the news. While they’ve since recovered, any new tariff news will likely see a similar reaction.
But, if history is any indication, the market’s tariff fears are overblown.
While tariffs can stir up plenty of political debate, the truth is they can create great opportunities for investors to capitalize on the market’s reaction.
In this article, we’ll share actionable steps to do just that.
But first, let’s look at some recent history that shows the market is overreacting.
Tariffs: Noise or market mover?
Whenever tariffs are announced, the knee-jerk reaction in financial media is to panic.
The mainstream narrative paints a doomsday scenario, but in reality, the market tends to overreact in the short term.
Historically, stocks that initially dip due to tariff concerns often bounce back once the dust settles.
We saw it in 2018, and we’re seeing it again now.
Take the last major tariff scare: While the S&P 500 closed down around 6% in 2018, it was the only negative year during Trump’s first term. And the following year, the S&P 500 rallied over 25%.
Put simply, the markets dipped, investors panicked, and then those who bought the dip made significant gains.
The reason?
While tariffs create uncertainty—which leads to short-term volatility—long-term fundamentals don’t change overnight.
Of course, not all industries react the same way to tariffs. Let’s break down the key sectors…
What sectors are most affected?
Manufacturing & industrials
These companies rely on imported materials, so tariffs on steel, aluminum, or electronics components can squeeze margins. Watch for dips in this sector, but also look for firms that can pass costs onto customers.
Technology
Many tech companies source components from China, so tariffs can disrupt supply chains. However, large-cap tech firms often have the resources to absorb or mitigate these costs.
Consumer goods
Retailers importing products from overseas might see higher costs, which could impact profits. Look for companies with pricing power—the ability to raise prices without losing customers.
Energy & commodities
Tariffs on imported oil, natural gas, or metals can shift global trade flows. Investors should monitor how these changes affect commodity prices.
How to Invest When Tariffs Hit
1. Buy the dip
If history repeats itself, tariffs will initially shake the market, but savvy investors will use this as a buying opportunity.
2. Look for companies with strong pricing power
Businesses that can raise prices without losing customers are better equipped to handle increased costs from tariffs.
3. Diversify into domestic plays
Companies less reliant on global supply chains (e.g., domestic manufacturers or service-based businesses) may be better positioned to weather trade tensions.
4. Consider commodity stocks
If tariffs impact raw material supply, commodities like oil, natural gas, and metals could see price swings that present opportunities.
5. Don’t forget about cryptos
Stocks weren’t the only assets impacted by the tariff news—cryptos also sold off. Bitcoin and other market leaders sold off over 10%, while many other cryptocurrencies sold off much more. As a result, many of the best crypto projects are now on sale.
Frank just recommended one such project in Crypto Intelligence. This crypto is a former triple-digit winner. And after the pullback, it could easily surge 200% from current levels.
6. Stay informed—but ignore the noise
The media often overhypes trade war fears. Instead of reacting emotionally, focus on long-term investing principles.
The bottom line
While tariffs create volatility… they also create opportunity. The key is to stay rational, look beyond the headlines, and position yourself to benefit from the inevitable market corrections. As always, focus on companies with solid fundamentals, pricing power, and strategic positioning in a changing global landscape.
If you do that, you’ll be well-positioned to profit while other investors panic.
And as always, tune into WSU Premium each week for insights into the latest market-moving headlines… and how to capitalize on them.
