A number of readers of my previous article on Trump’s tariff war asked about the best places to invest during the current situation. Let’s explore the various stock markets and sectors to see which ones might make the most sense to take advantage of at this time.

We’ll start with those areas that are most likely to be negatively impacted and therefore best to be avoided. The majority of economists and business leaders have alleged that Trump’s actions will most likely result in higher prices for businesses and consumers, so sectors that are especially susceptible to foreign imports ought to be top of mind.

China has been especially targeted, and most toys sold in the U.S. are manufactured there. Trump also imposed a worldwide 25% tariff on automobile imports. Both of those products fall under the Consumer Discretionary sector. That would seem to be a likely sector in which to avoid investing. How has it performed this year? Not surprisingly, since the start of 2025 it’s down over 5%. But wait – since Trump’s announcement on April 2^nd imposing broad worldwide tariffs, this sector has boomed over 13% and was amongst the top performing S&P 500 sectors since that time.

Well, what about international stocks. After all, Trump’s tariffs are allegedly intended to punish foreign countries for “ripping off” the U.S. Wouldn’t you think foreign-based companies would be an asset class to stay away from? Surprisingly, since the start of the year the S&P 500 is up only a fraction while international stocks are up over 15%.

Perhaps we should instead look at sectors likely to do well under the Trump Administration. Based on Trump’s “drill, baby, drill” policy encouraging fossil fuel growth, surely the energy sector should be thriving. But as of this writing it’s down over 1%.

I think you can see where I’m going with this. There are countless events one can point to where stock prices moved in the opposite direction of what an informed investor would logically have predicted. On December 22, 2018 the federal government was shut down for 35 days over a disagreement between then-President Trump and Democrats over funding for a U.S.-Mexico border wall. After an initial drop of about 7%, the S&P 500 surged ahead more than 15% before the dispute was settled. In 2016 U.K. voters unexpectedly voted to leave the European Union. Despite the shock, within weeks U.K. stocks began setting new highs.

It’s a truism that you can’t predict the future. With respect to investing it’s because the most unpredictable factor affecting market returns is investor sentiment. Whatever expectation of market movements you have, someone else will have an opposing view. Taken in aggregate, it is impossible to guess which way net investor sentiment will swing during any period of time, and its subsequent impact on stock prices.

So where should you invest during a tariff war? The answer is everywhere. Don’t try to guess the winners and losers. Instead be as diversified as you can (including other asset classes beyond equities), and try to maintain a portfolio that minimizes the risk associated with the return that you need in order to support your lifestyle. You are unlikely to go wrong with that approach.

(PERIGON is a registered investment adviser. More information about the firm can be found in its Form ADV Part 2, which is available upon request by calling 877-977-2555 or by emailing compliance@perigonwealth.com).