President Trump has announced his intention to impose import tariffs on all goods produced outside the United States, supporting his “America First” initiative. He wants to boost the country’s manufacturing industry, which is a boon for factory workers. However, tariffs can stimulate inflation as importers pass on additional costs to buyers.
Tariffs are thought to raise prices and reduce trade. Tariffs are paid by importers, which makes it more expensive to buy foreign products, thereby driving business to domestic producers, at least in theory. The problem is that importers could pass on some or all of the cost of new tariffs to consumers.
Stocks could rise sharply ahead of Trump’s return
Many Made in America companies will see the benefits of Trump’s tariffs as they receive more inflows. To avoid an imminent price hike, consumers and businesses may begin stockpiling supplies before Trump takes office. Stockpiling could be initiated in anticipation of potential Trump blanket tariffs of 10% to 25% on imports and 60% tariffs on Chinese products. Here are three stocks that could benefit from the cumulative effect of Trump’s additional tariffs.
Whirlpool: Precedent for stockpiling in 2018
Whirlpool today
(As of 12/17/2024 ET)
- 52 week range
- $84.18
▼
$126.30
- Dividend yield
- 5.82%
- P/E ratio
- 11.86
- Target price
- US$106.50
Giant of the retail and wholesale sector Whirlpool Company New York Stock Exchange: WHR Eight major manufacturing facilities in the United States employ more than 28,000 Americans, producing appliances such as refrigerators, dishwashers, ovens, washers and dryers. The company is an outspoken supporter of Trump’s tariffs. However, Trump also plans to raise tariffs on imported steel and aluminum to 25%. This will inevitably lead to higher prices for household appliances and consumer electronics.
An earlier precedent occurred during Trump’s first presidency, when he initially imposed tariffs on foreign steel and aluminum. American steelmakers enjoyed the influx of income, but also decided to take advantage of their position and raised prices as steel prices soared. This effectively stifled demand after 25% tariffs were introduced in March 2018. This has also led to a surge in the prices of home appliances such as washing machines. Many consumers made purchases of household appliances before the introduction of new tariffs, saving significant amounts of money.
If history repeats itself, consumers may begin to increase their purchases of household appliances. Contractors and home builders may also be purchasing appliances, stockpiling supplies ahead of potential new Trump tariffs, even if they plan to sell them later this year. In its third-quarter 2024 earnings report, Whirlpool noted that sales of large appliances were weakest in North America, down 4.3% year-over-year, compared with 9.1% growth in Asia.
The accrual effect could be a boon for Whirlpool’s top and bottom results for the fourth quarter of 2024, as it will lead to pre-sales that may be realized later in 2025.
Best Buy: Perfect AI Upgrade Cycle, Holiday Season and Stockpiling
Best buy today
(As of 12/17/2024 ET)
- 52 week range
- $69.29
▼
$103.71
- Dividend yield
- 4.30%
- P/E ratio
- 14.96
- Target price
- $101.06
Operator of large consumer electronics store Best Buy Inc. New York Stock Exchange: BBY The third quarter of 2024 was weak as the holiday shopping season approaches. Sentiment about a new cycle of artificial intelligence-based electronics upgrades has weakened following the third-quarter report.
However, a potential spike in spice from Trump’s new round of tariffs could also cause consumers to accelerate their electronics upgrade cycle to coincide with the holiday shopping season, making Best Buy a boon for investors in 2025. The impact could be even greater given expectations. being taut, setting a low bar for that quarter.
Affirm: Financing the savings effect with 4 biweekly payments
Confirm today
(As of 12/17/2024 ET)
- 52 week range
- US$22.25
▼
$73.34
- Target price
- $58.21
If consumers stockpile ahead of Trump’s feared tariffs, they will have to finance their purchases. Affirm Holdings Inc. NASDAQ: AFRM said the holiday season is their busiest time of the year as shoppers use the buy now, pay later platform to make purchases they might not otherwise be able to afford. Affirm directly improves conversion rates for merchants.
Because Affirm receives commissions from merchants who sell products to consumers, they are a major benefactor of stockpiling, especially for big-ticket items like appliances. Consumers making such purchases are killing two birds with one stone, since these purchases also serve as Christmas gifts.
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