Other than the obvious primary sectors (Construction, Infastructure and Automotive), which secondary sectors will Trump's steel & aluminum tariff affect the most? Such as sectors that are indirectly dependent upon, or use steel & aluminum to lesser extents.

I ask for stock investing purposes. Currently my focus is in SemiConductors, E-Commerce, and PaymentProcessing which I imagine will be relatively safe. Maybe there is a connection that I haven't considered. Which other sectors are safe?

  • Steel is used almost in every industry, so there will be multiple effects and in almost economies it is considered one of the core sectors of the economy. The exact affects in short term aren't going to be much but in the long term it all depends on how long the tariffs stay in place and how does the economy realigns itself. – DumbCoder Mar 9 '18 at 15:48
  • Despite stating that "this is for stock investing processes" this is really a question about economics and politics, not personal finance. – DJClayworth Mar 12 '18 at 13:56
  • I checked the help center, but i find nothing (mission statement or description) stating what model subjects "personal finance & money" questions should be about, which would be a helpful resource. I feel this question is relevant to this forum since the answer could directly influence investors' personal finance when picking stocks. – Dustin Mar 14 '18 at 1:31

The most obvious other sectors will be those that are hit by other countries retaliating. The EU has targeted peanut butter, orange juice, bourbon and jeans. This may seem like an odd list. It's determined by political reasons, not economic.

It also fits quite well in a 20th century pattern of thinking - I probably would expect much more of a response if the EU just put tariffs on Facebook and Google. Even 1 cent per Google query would assure a quick call from their CEO to Trump, and that's going to be more effective than a few peanut farmers complaining.

So the exact sectors hit are quite hard to predict, as it depends on the savviness of other countries and their particular economic goals. China will most likely retaliate in its own way. From what we know from the last time this was tried (1930's), the best prediction is that every sector in the US economy will suffer.

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  • Google is run by Democrats while peanut farmers are mostly Republicans. Trump is more likely to hear complaints from peanut farmers than Google. It's less about people calling Trump and more about people calling people who talk to Trump. I.e. the Google CEO is one person. The Georgia congressional delegation is larger and more likely to listen to complaints from peanut farmers than some California company. Trump needs congressional support. He can live without Google's support. – Brythan Mar 13 '18 at 3:48
  • @Brythan: Actually, the EU sanctions also target Nancy Pelosi. It's intended to achieve a bipartisan rejection of Trump's plan. – MSalters Mar 13 '18 at 9:38

Payment Processing is dependent on E-Commerce.

Semiconductors are dependent on imports, as semiconductors are not manufactured in the United States.

E-Commerce is dependent on delivery services (FedEx, UPS, etc.) and imports. Delivery because that is how products get to e-commerce purchasers. Imports because much of the stuff that e-commerce sells is imported.

Delivery services are dependent on trucks and gasoline.

Gasoline is also delivered and cost of transport is affected by the cost of those trucks.

As you've already noted, trucks are dependent on steel and aluminum.

It should be obvious that if there is a trade war, imports are going to be hit.

TL;DR: My point is that even your safe sectors aren't particularly safe. They too are dependent on imports in general or specifically on steel and aluminum. Even if not directly, there are indirect effects.

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  • You make good points and connections but effectively you stated all things are connected. This is true. So I guess I'm trying to analyze sectors on a spectrum of "most affected" to "least affected." As to clumping all imports in a basket, Trump's steel/aluminum tariff and retaliatory tariff threats by other countries are not "blanket" tariffs on all goods. (i.e. I've haven't heard of any retaliatory tariffs on semiconductors, although blue jeans have been mentioned by EU) – Dustin Mar 14 '18 at 1:25

You have to look at substitutes for steel. Silver, Gold ect. You can expect mining industries and conductors of electricity to be beneficiaries of the tariff indirectly. Also, the “inflation” scare in terms of price inflation, can be a benefit to minors and oil sectors as well. This is a perfect storm for other commodities due to the increases deficit. For investing purposes, silver and gold minors appear to be the way to go as a substitute AND as a hedge against price “inflation”, at least on a short-term basis. My assumption however is that the tariffs are a negotiating tactic, and in the long-run, may not have a major impact because it’s hard to know if they’ll remain for long.

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    In which world is silver a substitute for steel ?? Are you considering building a skyscraper out of gold? Not even in Dubai are they rich enough for that, never mind the physics. – MSalters Mar 12 '18 at 13:18
  • Consumer appliances. Silver is a pretty standard substitute as we all know. Stainless steel stoves for example vs. Silver stoves. However, they are not "perfect" substitutes as we know in economics, similar to how sherbet will never be a perfect substitute for ice cream as we know. – Simeon Ikudabo Mar 12 '18 at 13:30

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