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Stocks to Watch as Trump’s Trade War Creates Opportunities in the Market

Emilia Wright | February 4, 2025

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Stocks to Watch as Trump’s Trade War Impacts Markets

President Donald Trump’s commitment to instigate trade tensions with Canada, Mexico, and China is beginning to manifest in tangible effects for various sectors. As the U.S. prepares to implement a 25% tariff on goods from Mexico and Canada, alongside a 10% tariff on imports from China, some businesses are already positioning themselves as potential beneficiaries of these tariffs.

Tariffs and Temporary Suspensions

Initially slated for enforcement on Tuesday, Trump’s tariffs were unexpectedly paused for one month following a “very friendly conversation” with Mexican President Claudia Sheinbaum. The announcement, made via Trump’s social media, mentioned that high-ranking officials, including Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and Howard Lutnick, Trump’s nominee for commerce secretary, would engage in negotiations during this month-long hiatus.

For Canada, a similar 30-day pause has been communicated. These delays are crucial for establishing a more favorable economic agreement, especially after Canada preemptively sought retaliatory tariffs against American products. Most notably, the Liquor Control Board of Ontario acted swiftly to remove American liquor from its shelves in reaction to the proposed tariffs.

Beneficial Stocks in the New Trade Environment

Despite the uncertainty surrounding tariffs, several stocks are positively positioned in this evolving trade landscape. Analysts have begun to identify companies that could turn the impending trade war to their advantage.

Molson Coors: Beer Brands on the Rise

Bank of America analyst Bryan Spillane has singled out Molson Coors Beverage Co. (TAP) as a likely winner in a climate where Mexican beer imports are becoming less competitive. The analyst argues that if Mexican brands become pricier due to tariffs, U.S. beer brands could gain market share. Interestingly, Molson Coors’s stock dipped 2.5% during Monday’s trading, while competitor Altria Group Inc. (MO) saw its shares rise 1.2%, bolstered by expectations of regulatory moves against illicit products.

RBC Bearings: Manufacturing Resilience

RBC Bearings Inc. (RBC) also received attention as Truist Securities raised its price target significantly, from $351 to $410. Analyst Michael Ciarmoli noted that the company is well-positioned to navigate tariff-related challenges thanks to their operational strategies across three factories in Mexico. With over 90% of its sales originating from the U.S., RBC Bearings is minimally affected by foreign tariffs and may even benefit from increased industrial activity.

Reynolds Consumer Products: Home Brands Thrive

J.P. Morgan likewise highlighted Reynolds Consumer Products Inc. (REYN) as a resilient player in the consumer goods market. Known for its “Made in the U.S.A.” branding, Reynolds benefits from growing consumer nationalism. Despite operating one facility in Canada, the company’s 25 manufacturing plants across various states solidify its standing against potential consumer backlash.

Canadian Retailers: Adapting to Tariffs

In Canada, retailers like Dollarama Inc. (CA:DOL) could gain from an “inflationary trade-down,” as consumers might turn to cheaper options amid rising costs. TD Cowen’s analyst Brian Morrison also identified companies like Gildan Activewear Inc. (CA:GIL), Canadian Tire Corp. (CA:CTC.A), and Roots Corp. (CA:ROOT) as having limited exposure to U.S. tariffs, putting them in a favorable position to attract budget-conscious consumers.

Conclusion

As the realities of tariffs set in, various sectors, particularly those aligned with domestic manufacturing, consumer goods, and beverage industries, are poised for potential growth. With negotiations ongoing and temporary pauses in place, it remains to be seen how these dynamics will play out. Investors should closely monitor the developments surrounding these tariffs as they could create both challenges and opportunities in the marketplace.