Trump Tariffs 2.0: Investing themes for a more protectionist world

For long-term investors, the biggest question related to the US Trump administration’s tariff policies isn’t the immediate market swings and volatility—it’s how to position for a world where tariffs keep coming, and stymie international trade.

Why Tariffs could be a long-term game for Trump

Tariffs aren’t just about taxing imports. They’re a policy tool with multiple purposes.

• National Security: Trump’s first push on tariffs was focused on “punitive tariffs” targeting immigration and drug-smuggling concerns.
• Economic Leverage and Retaliation: There are also “structural, long-term tariffs” aimed at fixing trade imbalances or “reciprocal tariffs” as opposed to a flat-fee tariff where these are used as a threat or bargaining tool. Governments often use tariffs to protect critical industries from foreign competition. This includes countering subsidised foreign firms that undercut US companies, trade discrimination against American businesses, or persistent trade deficits with key partners.
• Revenue Generation: A lesser-known angle is using tariffs to fund government spending. Some Republicans are floating a 10%-20% tariff on all imports to replace lost tax revenue.
  
  
  

These policies suggest that tariffs are no longer just short-term trade disputes—they’re becoming a permanent fixture in US economic policy. And if the trend toward protectionism, self-sufficiency, and government-driven industrial policy is here to stay, investors must position for a world where protectionism is the norm, not the exception.

How a protectionist world reshapes investing themes

A shift toward protectionism changes the investment landscape. The past decades favoured global supply chains, free trade, and cost efficiency, but the future may be shaped by self-sufficiency, redundancy, and domestic investment.

1.     Domestic manufacturing and industrial revival

Protectionism is accelerating the reconstruction of domestic production capacity—especially in materials, technology, and infrastructure. Governments are offering incentives for companies to expand US-based manufacturing, strengthening supply chains and reducing reliance on foreign production. This means a long-term capital investment shift toward:

• Factory construction and industrial automation. Companies like Caterpillar (CAT) and Emerson Electric (EMR) play a role in infrastructure, automation, and reshoring efforts. Honeywell (HON) is another major player benefiting from advanced manufacturing trends.
• US-based semiconductor and advanced manufacturing hubs. The push to secure domestic chip production is a megatrend, with Nvidia (NVDA), AMD (AMD), and Broadcom (AVGO) at the centre of the industry. Applied Materials (AMAT) and Lam Research (LRCX) provide critical semiconductor equipment.
• Stronger domestic steel, aluminum, and raw materials supply chains. US steel and aluminum producers like Nucor (NUE), Steel Dynamics (STLD), and Alcoa (AA) could remain key as government policies favour local production.
  
  
  

2.    Energy and resource independence

Protectionism isn’t just about factories—it’s also about securing access to critical resources like oil, natural gas, rare earth minerals, and agricultural production. Investment in this theme includes:

• Fossil fuels and renewables to ensure stable domestic energy supply. ExxonMobil (XOM) and Chevron (CVX) continue to play a major role in US energy security. On the renewable side, NextEra Energy (NEE) and First Solar (FSLR) are expanding US clean energy infrastructure.
• Critical minerals and battery production for electric vehicles and defence applications. The US is looking to increase its domestic supply of lithium and other rare earth elements. Albemarle (ALB) and Lithium Americas (LAC) are key players in lithium production, while MP Materials (MP) focuses on rare earth mining.
• Food security as agricultural policy shifts toward greater self-sufficiency. Major agribusiness firms like Archer Daniels Midland (ADM) and Bunge (BG) continue to play a central role in securing U.S. food production.
  
  
  

3.    Defence and cybersecurity expansion

With trade wars escalating into broader economic and geopolitical conflicts, national security spending is increasing. The US and other major economies are ramping up investment in defence, cybersecurity, and supply chain protection, supporting growth in:

•  Military technology and domestic weapons manufacturing. Defence contractors like Lockheed Martin (LMT) and Northrop Grumman (NOC) benefit from increasing defence budgets. Raytheon Technologies (RTX) is another key player in aerospace and defence systems.
• AI-driven defence and data security solutions. Palantir (PLTR) specializes in AI-driven defence and intelligence solutions, while Booz Allen Hamilton (BAH) provides consulting and cybersecurity expertise to the US government.
• Infrastructure hardening to protect against cyber and supply chain disruptions. Companies like CrowdStrike (CRWD), Fortinet (FTNT), and Palo Alto Networks (PANW) are focused on securing digital infrastructure from cyber threats.
   

4.    Inflation, cost pressures and pricing power

Protectionism, tariffs, and supply chain restructuring create higher input costs—fuelling inflationary pressures. Businesses with pricing power and strong supply chains are better positioned to navigate rising costs, including those in:

• Consumer staples and essential goods. Companies like Procter & Gamble (PG), Coca-Cola (KO), and PepsiCo (PEP) have pricing power, as consumers continue buying their products regardless of economic conditions.
• Retailers with scale and efficiency. Costco (COST), Walmart (WMT), and Home Depot (HD) have strong supply chain control and the ability to pass on costs to consumers.
• Other inflation hedges. These include REITs, commodities, TIPS (Treasury Inflation Protected Securities), dividend stocks and precious metals.
  

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Protectionism as the new normal

The move toward a more protectionist economy isn’t temporary—it’s a structural shift. Governments are prioritising economic security, supply chain resilience, and national interests over efficiency.

The past decades rewarded companies that optimised for cost efficiency in a globalized world. The next era will reward those that optimise for resilience, domestic production, and geopolitical stability.

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