- Investors are scrambling to adjust their portfolios as the US puts tariffs on trade partners.
- Many in markets believe that import taxes will drive up costs and hurt economic growth.
- Here’s where six investing gurus say to put your money now.
Tariffs are rocking the stock market, and investors can’t say they weren’t tipped off.
US equities approached correction territory this week as trade disputes escalated. The S&P 500 fell 6% from its mid-February high, erasing its postelection gain, and the growth-heavy Nasdaq Composite was down 8% from its peak.
President Donald Trump had repeatedly promised on the campaign trail to raise import taxes on key US trade partners, in hopes of notching political wins and raising government revenue.
The consensus among economists and strategists was that this plan had more risk than reward, as a tariff-heavy trade policy could lead to trade wars that would hurt growth and boost inflation.
Leading the anti-tariff charge is veteran strategist David Kelly of JPMorgan Asset Management. Tariffs “raise prices, slow economic growth, cut profits, increase unemployment, worsen inequality, diminish productivity and increase global tensions,” he recently warned. “Other than that, they’re fine,” he quipped.
Others downplayed that concern, figuring Trump was bluffing or could reach deals with allies. And even if there are trade wars, some doubt that there will be lasting economic pain.
“The threat is real; I certainly agree with that,” said Brian Mulberry, a portfolio manager at Zacks Investment Management, in an interview. “But the reaction of the market is a little bit overdone.”
It’s unclear if Trump’s bold trade strategy will pay off, but all indications are that he’ll stick to it. That has markets on edge, in part because it looks like there’s no blueprint for them to follow.
“Tariffs of this size and magnitude haven’t happened in about 100 years,” said Callie Cox, the chief market strategist at Ritholtz Wealth Management, in a recent interview. “We’re working with a pretty unprecedented change in policy here.”
However, investors shouldn’t surrender in this tariff-driven sell-off. Business Insider compiled views from top strategists and portfolio managers on where people should put their money now.
Hide in defensive sectors like healthcare
Investors should take a risk-off approach by buying stocks in defensive sectors, strategists said.
“This is the time to play defense and to really protect yourself,” Cox said.
Healthcare and consumer staples are the best-performing parts of the market so far this year. They’re less sensitive to economic trends, since demand for essential goods like drugs and groceries won’t waver much in recessions — or based on changes in trade policy.
“The downside to tariffs, let’s say it spills over to a mild recession: I think the probability of outperformance from more defensive areas of the market — like consumer staples and healthcare — that probably is much higher than something like tech,” said Matt Stucky, the chief portfolio manager of equities at Northwestern Mutual, in a recent interview.
Several investing gurus were especially interested in healthcare, given its long-term tailwinds.
“America is aging, and no tariff will slow that trend,” said Grant Stark, the director of research at CapWealth, in an email to BI. “There will likely be more demand for advanced medicines, skilled care, and other health-related segments.”
Within healthcare, Stark cited pharma giants Merck and Gilead as potential winners as the US population ages, as well as pharmacy retailer CVS Health. Mulberry also highlighted CVS and said he’d avoid tariff-exposed firms, like those that manufacture pharmaceuticals offshore.
Greg Halter, the director of research at Carnegie Investment Counsel, called out biopharma firm Amgen — shares of which are already up 22% in 2025 — and medical device maker Stryker.
“It’s not cheap — it never is — but you’d be hard-pressed to find a better company, fundamentally,” Halter said of Stryker. “Good balance sheet, good cash flow, great dividend record, but trading at 29x [forward] earnings.”
Financials are staying afloat
Even though the US economy seems to be slowing down, strategists aren’t writing off cyclicals.
Several commentators cited financials as attractive. Wall Street was already excited about deregulation under Trump, which could spark more dealmaking activity. Interest rates are more of a mixed bag since higher-for-longer rates can boost profits but hurt transaction volume.
Crucially, financials aren’t directly affected by tariffs — unlike materials or industrials.
“If you think about sectors that are not as exposed to goods production, financials are the obvious one there,” Cox said. “Banks don’t have supply chains.”
In this cohort, Halter said he likes insurance giant Progressive’s ability to adapt to fast-changing markets by adjusting their advertising spending. If the economy weakens substantially, he said Progressive can show less of iconic spokeswoman Flo — even if it disappoints audiences.
Quality, tangible assets take center stage
Investors would be wise to stick with quality stocks across sectors as tariffs roil the market, said Gabriela Santos, the chief market strategist for the Americas at JPMorgan Asset Management, in recent written commentary.
This means prioritizing stocks with robust balance sheets and steady earnings that can thrive in any economy. To her, large and mid-sized companies are the best bets here. Small caps have sky-high earnings expectations, though she said slower economic growth could hold them back.
Santos also said a less certain economic backdrop may put real assets like gold in the spotlight.
“Other diversifiers are needed when inflation and fiscal concerns take the lead again,” Santos wrote.
Fixed income is looking favorable
Adding exposure to high-quality fixed income can help investors hedge against falling stocks and slower economic growth — all while diversifying their portfolios, strategists said.
Bond yields have hovered well above pre-2020 levels and pandemic lows for years, which gives buyers a chance to lock in solid, guaranteed yields. Stucky said bonds offer protection against weaker economic growth during trade wars. And if inflation fades, yields will look even better.
“If there’s any place to hedge against the downside risk to growth that comes from trade uncertainty, it is high-quality fixed income,” Stucky said.
Cox concurred, though she has her eye on Treasury Inflation-Protected Securities, or TIPS, to guard against the higher price growth that tariffs could spark.
“Holding onto some inflation protection is prudent because the risk of higher prices certainly hasn’t gone away,” Cox said.
