What are tariffs, why is Trump using them, and will prices rise?

The current trade tensions are likely to negatively impact sectors heavily reliant on raw materials, particularly steel and aluminum. US-based companies that utilize these materials in their production could face increased costs, leading to reduced profit margins or higher prices for consumers. Sectors like automotive manufacturing may see increased volatility, but tariffs on exempted goods might cushion the blow somewhat.

As the tariffs could lead to decreased international trade, companies involved in logistics and transportation might experience a downturn. Additionally, companies focused on international trade may also see disruptions to their supply chains, leading to potential stock difficulties. Investors in such sectors should be cautious in the current market landscape.

The tariff increases and subsequent supply chain disruptions and price hikes could drive investors towards basic materials and defensive stocks that are less sensitive to tariff fluctuations. Moreover, commodities that are domestically produced may see a rise in demand as import prices increase.