Trump’s first 100 days: always opportunities for investors

It’s been a whirlwind few months for global financial markets, but it’s not all gloom. Analyst Rodney Hobson looks at stocks to be wary of and those that may avoid the tariff wars.

30th April 2025 09:12

Rodney Hobson from interactive investor

We are into unchartered territory. So what’s new? In a twist on the old French saying plus ça change, plus c’est la même chose, we have been plunged by US President Donald Trump into circumstances that have not happened before in our lifetime, yet there is something vaguely familiar about it all.

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For the nearest equivalent to Trump’s tariff war, we have to go back nearly 100 years to the start of the great depression. As the global economy collapsed, the United States ramped up tariffs to protect American industry, thus making a bad job much worse.

This time the circumstances are different. Despite the Russian invasion of Ukraine and the disruption caused by sanctions against the aggressors, the global economy was still holding up well. Despite Trump’s protestations that other countries have been living high on the hog at America’s expense, Americans have in fact done pretty well out of the world order.

Look at stock market charts for proof. The Dow Jones Industrial Average, for example, stood above 40,000 points at the start of this year, just below its record high and six times the level it sank to after the 2008 financial crisis. The S&P 500 index rose to 6,100 points just after Trump took over, double the level it enjoyed only three years ago.

This crisis is quite different from the past three, which had different causes, different effects and lasted for different lengths of time.

Investors had only themselves to blame for the tech crash at the start of the Millennium, having driven up the share prices of companies with no genuine revenue (and in some cases no genuine product) to unrealistic levels. Banks were to blame for the financial crisis of 2008, having driven up the prices of low-quality assets to unrealistic levels. These two crashes were a direct consequence of greed and were predictable, even though few people did predict them.

In contrast, the Covid epidemic came out of nowhere, a genuine black swan event that caught governments and investors unprepared.

This time the crisis has been caused by one quixotic leader on one country that unfortunately for the world happens to be the largest economy and therefore has the biggest impact.

But some things are common to all investment crises. Firstly, it is of paramount importance not to panic. Remember that we always come through at the other end and those who hold their nerve come out best.

Secondly, it is always easier to spot the companies or sectors that you should avoid rather than where the opportunities lie, and this time is no different.

American companies with supply chains originating in China are most vulnerable, although any supplies arriving from outside the United States will be hit by tariffs. Vehicle makers in particular, such as Ford Motor Co (NYSE:F) and General Motors Co (NYSE:GM), will be affected by the rising cost of imported steel. Substituting steel produced in the US will not entirely alleviate this; if US steel was to be preferred on quality or price, car makers there would already be using it. They will also be hit by the double whammy of tariffs on Chinese computer chips that have become an essential part of any vehicle’s operating system.

Tesla Inc (NASDAQ:TSLA) has an additional problem. Its boss Elon Musk is so heavily linked to the Trump administration that it will suffer particularly from the backlash against American goods that has been seen most acutely in Canada but is also evident in Europe, where sales of Tesla vehicles fell 28.2% in March despite an overall 23.6% increase in sales of electric vehicles. That is the third consecutive month of decline for Tesla in Europe.

Another victim of the backlash is Boeing Co (NYSE:BA), which was already suffering from safety concerns, strikes and increased wages. Aircraft are often sold with options to buy more. Cancellation of those options in retaliation for Trump’s tariffs will knock a huge hole in Boeing’s income and profits.

Beware also of companies that were already struggling before Trump’s “Liberation Day” put shackles on free trade. Drinks maker PepsiCo Inc (NASDAQ:PEP) pointed to "increasingly dynamic and complex" market conditions in the first quarter as it said earnings per share would be flat over 2025 as a whole compared with growth of around 5-6% indicated previously. It expects increased supply chain costs to arise from what it tactfully described as “global trade developments”.

The impact of Trump’s first 100 days will naturally be felt also by companies on this side of the Atlantic. European pharmaceutical companies such as Novo Nordisk AS ADR (NYSE:NVO) and Roche Holding AG (SIX:ROG) will struggle to sell into the major American market, where an ageing population offers prospects of greater demand for drugs and appliances. The heavy drop-off of demand for Covid vaccinations will be compounded by tariffs.

All is not gloom, however. Far from it. However difficult the outlook seems, there are always opportunities for investors. The yoyoing of markets in response to Trump’s on-off tariff threats has already provided plenty of scope for short-term traders and will continue to do so.

Some companies will mainly or entirely avoid the impact of the tariff wars. Oil majors, far from being on the way out in a new green age, have a product that is still in demand and which will probably enjoy a rise in price. Companies such as Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) already stood to benefit from Trump’s exhortation to drill. Faced with rising prices for a range of goods, consumers the world over may feel, rightly or wrongly, that reducing carbon usage is a luxury they cannot afford.

Companies that have a global market but are reasonably immune from tariffs should come through pretty much unscathed. For example, fast food chain McDonald's Corp (NYSE:MCD) tries to source its food supplies within the countries where it has outlets.

Another interesting possibility is media conglomerate Comcast Corp Class A (NASDAQ:CMCSA), which produced a first quarter profit figure only slightly down on last year despite the disruption that the destructive California forest fires had on its Universal Studios theme park in the state. Comcast plans to expand into Europe with a park in Bedfordshire, which has bought some goodwill in this country at least.

What makes the latest stock market crisis unique is that one man can sweep the problem away with a few strokes of his executive pen. That is a real possibility, as President Trump has a remarkable skill in turning each setback into a claimed success. Or he can dig in his heels and prolong the chaos for at least four years.

No-one can be sure – but that is in the nature of investing. You never know what will happen next. But those who have held their nerve through previous crises know that there will always be light at the end of the tunnel.

Rodney Hobson is a freelance contributor and not a direct employee of interactive investor.

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