To The Moon

The reinstatement of reciprocal tariffs by the U.S. government has created significant volatility and uncertainty in global markets as of August 2025.

The reinstatement of reciprocal tariffs, which was initially met with significant market volatility and fear, is now being viewed by some as a source of new opportunities. This shift in perspective is driven by a more detailed understanding of how these tariffs are being implemented and the resulting changes in the global trade landscape.

Initially, markets reacted with panic to the broad, sweeping nature of the tariff announcements, which threatened to disrupt established global supply chains and potentially trigger a full-blown trade war. This led to sharp declines in stock markets, particularly in sectors like automotive and technology, and a rush toward safe-haven assets.

Here is a breakdown of how this is impacting the market:

Immediate Market Reaction:

Stocks: The initial reaction to the tariffs, combined with a weak jobs report, has led to a sharp downturn in the stock market. Major indices like the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite have experienced significant declines.

Safe-Haven Assets: In response to the market turmoil, investors have been turning to traditional safe-haven assets. For example, gold futures have seen a notable increase in price.

Currency: The U.S. dollar has strengthened significantly against other currencies, reaching a two-month high. This is putting pressure on emerging markets and causing foreign investors to pull capital out of those regions.

Economic Effects and Sector-Specific Impacts:

Inflation and Consumer Prices: The tariffs are essentially a tax on imported goods, and many economists believe that American companies and consumers will bear the brunt of the cost. Companies are expected to either absorb the costs, leading to lower profits, or pass them on to consumers through higher prices. This could contribute to inflationary pressures.

Corporate Earnings: Companies that rely on international supply chains and imported raw materials, such as steel and aluminum, are particularly vulnerable. Some major companies have already warned investors about the negative impact of tariffs on their profits.

Targeted Industries: Specific sectors in countries facing high tariffs are at a greater risk. For instance, in India, sectors like pharmaceuticals, textiles, and electronics manufacturing are expected to be negatively impacted by the newly imposed 25% tariff.

Winners and Losers: While many sectors are facing headwinds, some companies and industries could potentially benefit. For example, some domestic manufacturers may see a boost as their products become more competitive compared to tariff-laden imports. There are also reports of some companies, like First Solar, seeing their stock rise due to shifts in trade policy strengthening their position in the industry.

Uncertainty and Outlook:

Ongoing Negotiations: The market remains highly sensitive to developments in trade negotiations. While some countries have reached deals to limit the tariffs, the situation is still evolving, and the potential for further changes and retaliatory measures from other nations is a major source of uncertainty.

Federal Reserve Policy: The Federal Reserve is closely watching the economic data, including the weak jobs report and the potential for inflation due to tariffs. The current conditions have increased the likelihood of a potential interest rate cut to stimulate the economy, which is another factor influencing market movements.

Long-Term Impact: The long-term effects of this trade policy are still unfolding. The tariffs could lead to a restructuring of global supply chains, with companies relocating production to avoid the new taxes. This policy is also being challenged in court, adding another layer of uncertainty.

However, as the specifics of the tariffs have become clearer, new opportunities have emerged. Businesses and investors are moving from a reactive to a strategic mindset, seeking to capitalize on the new environment. This includes:

Supply Chain Relocation: Companies are re-evaluating and relocating their supply chains to countries that have either negotiated lower tariff rates or are exempt. This is creating new opportunities for manufacturing and logistics hubs in these "tariff-friendly" nations.

Domestic Production and Reshoring: The tariffs provide a competitive advantage to domestic producers by making imported goods more expensive. This incentivizes companies to "reshore" production back to the home country, creating investment and job opportunities in domestic industries.

Negotiated Trade Deals: The tariffs are being used as a bargaining chip to secure new trade agreements. This process, while fraught with uncertainty, has led to some bilateral deals that create new market access and investment commitments, offering specific opportunities for companies in those sectors.

New Revenue Streams: Some companies are finding ways to mitigate tariff impacts by exploring alternative revenue streams, such as reselling returned goods, which have already cleared customs, through discount marketplaces.

What Opportunities Are They For Us To Trade?

With positive market movements and a strategic shift in investor sentiment, there are several ETFs to consider that are designed to navigate the current trade environment. While initial fear caused by tariffs has subsided, the focus has moved to companies and sectors poised to benefit from the resulting changes, such as reshoring and the restructuring of global supply chains.

Here are three types of ETFs to consider:

Reshoring and Domestic Manufacturing ETFs: These funds focus on companies that stand to benefit from manufacturing and production moving back to a country's domestic shores. The Tema American Reshoring ETF (RSHO) is a good example. It's an actively managed fund that invests in a variety of industries including industrials, materials, and semiconductors, all of which are critical for building up domestic supply chains. The $iShares U.S. Manufacturing ETF(MADE)$ is another option that tracks an index of U.S. manufacturing companies, giving investors broad exposure to this theme.

Based on what I have seen using the RSI momentum indicator, it looks like MADE is for a HOLD,but I would think this might be a good time to start looking into this ETF.

Small-Cap and Domestic-Focused ETFs: Smaller companies often have less international exposure than large multinational corporations, making them more insulated from the direct impact of tariffs and global trade disputes. The $Vanguard S&P Small-Cap 600 ETF(VIOO)$ is a fund that focuses on smaller U.S. companies. Since many of these businesses are more heavily focused on the domestic market, they can potentially benefit from tariffs by gaining market share from international competitors.

Based on what I have seen from the RSI momentum, VIOO is giving a good BUY signal, which I think this might be a good time as more U.S. businesses which are focused on the domestic market would gain more market share from the international competitors and these stocks should be coming up soon.

Low-Volatility ETFs: In a period of ongoing, albeit less severe, volatility, low-volatility ETFs can provide a more defensive position. These funds are designed to hold up better than the broader market during turbulent times. The $Invesco S&P 500 Low Volatility ETF(SPLV)$ is a well-known option that invests in the least volatile stocks within the S&P 500, offering a potential hedge against market swings while still providing exposure to a strong index.

Though we are seeing negative RSI momentum, but we saw a BUY signal due to the fact that this ETF could hold up better than the broader market during turbulent times. We still need to prepare for any potential market swings due to the tariffs turmoil, so this ETF might be something we can use to hedge against.

Summary

The initial fear of broad market disruption has given way to a more nuanced view where the tariffs, while still a challenge, are also a catalyst for strategic changes that can be exploited for profit and growth.

Initial fears of widespread trade wars from the recent tariffs have shifted to a more nuanced, and in some cases, positive market reaction. This is because many of the newly announced tariffs were lower than initially threatened, and some countries successfully negotiated more favorable terms.

This has reduced the immediate uncertainty and panic, allowing investors to focus on the opportunities created by the new trade landscape. The tariffs are now seen as a catalyst for strategic changes like reshoring and the strengthening of domestic industries, rather than a broad economic headwind.

Appreciate if you could share your thoughts in the comment section whether you think investing in ETFs now would allow us to take advantage of this new trade landscape.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.