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Trump Tariffs: ETF Winners & Losers

Neena Mishra

Last week, President Trump announced that his administration plans to impose 25% tariff on imported steel and 10% on imported aluminum, in fulfillment of a key campaign promise.

While more details are expected this week, the announcement sent stocks tumbling as market experts warned that the move could result in retaliatory actions by our trade partners and raise the possibility of a trade war.

Political leaders in Europe, Canada and China have already threatened retaliation.

Shares of steel users were the worst sufferers. These included automakers, aerospace companies, construction & heavy equipment makers.

The winners included steel and aluminum makers.

Trump’s reasoning for tariffs is that domestic producers have suffered due to unfair trade practices by our partners.

Arguments against the tariffs include that steel and aluminum users will suffer due to rise in prices. These sectors employ millions more than steel and aluminum producers.

There is still a lot of uncertainty till we see the final version of these proposals. President Trump has also indicated that if Canada and Mexico sign a fair NAFTA agreement, they could be exempt from tariffs.

We looked at potential ETF Winners & Losers if these proposals are implemented.

The SPDR S&P Metals & Mining ETF (XME), which has more than 50% allocation to steel companies and more than 12% to aluminum companies, could be a big beneficiary.

The only pure-play steel ETF--VanEck Vectors Steel ETF (SLX) has a global focus, with US companies accounting for only 37% of total assets. It may not benefit much from these tariffs.

Losers include Industrials & Automakers. The Industrial Select Sector SPDR Fund (XLI) has large exposure to Aerospace & Defense (29%) and Machinery (18%) companies. These are heavy users of the metals and would be impacted by tariffs.

The only pure-play automobile ETF--First Trust NASDAQ Global Auto Index Fund (CARZ)—focuses on global auto companies. It may not be impacted much by tariffs.

To learn more about these ETFs, please watch the short video above.

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VANECK-STEEL (SLX): ETF Research Reports
 
SPDR-INDU SELS (XLI): ETF Research Reports
 
FT-NDQ GL AUTO (CARZ): ETF Research Reports
 
SPDR-SP MET&MIN (XME): ETF Research Reports
 
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Zacks Investment Research
 
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