What To Invest In During a Trade War: Gold, Stocks or Bonds?

TradingKey - In 2025, uncertainty wears a familiar name: Trump. From volatile tariffs to abrupt policy shifts, his trade agenda has turned predictability into a luxury. But what if market chaos isn’t a threat—but a gateway to profit?

As the saying goes, “The bigger the storm, the pricier the catch.” Today, Petar TradingKey senior analyst Petrov will decode four scenarios to help you navigate trade war volatility. Our research reveals a clear hierarchy for the next three months: US stocks > Treasury bonds > gold.

The full text of the script is as follows:

What is uncertainty? In 2025, it might just have a name. From shifting tariffs to sudden extensions and exemptions, Trump’s trade policy is anything but predictable. But what if uncertainty isn’t something to fear?

Hi everyone, I’m Petar Petrov, senior analyst at TradingKey. In this video, we’ll dive into four scenarios, so you can navigate volatility and act with confidence.

Before we start, remember to tap the like button, and without further ado, let’s dive into the details.

The first scenario assumes that the tariffs will slow economic growth but not trigger a recession. Supply-side cost pressures will rise, but weak domestic demand is expected to keep inflation in check, resulting in a “low growth, low inflation” environment. In this context, we expect the Fed to restart interest rate cuts later this year.

In Scenario 2, we assume tariffs escalate enough to push the US into recession, forcing the Fed to respond with aggressive rate cuts.

In Scenario 3, we assume tariffs slow down growth and fuel inflation. This outcome is a favourable setup for gold prices to rise. Weak growth enhances gold’s safe-haven appeal, while rising inflation supports its value as a store of wealth.

Lastly, Scenario 4 assumes that Trump, facing overwhelming pressure from the public and the Congress, is forced to roll back most or all tariffs. While we view this as highly unlikely, if this were to happen, US equities would likely hit new highs in the near term.

Among these four scenarios, Scenario 1 has the highest probability, reinforcing our bullish stance on the S&P 500 over the next three months. The next big question is, how should investors position their portfolios to capture this opportunity? Let us know what you think in the comments below (point at description box).

Industry Section

With the new tariff package, we’re seeing a wide range of impacts across different industries, with some sectors hit much harder than others. In light of this, we’re proposing three sector-based strategies for investors:

Bullish on Low-Volatility Value, and Bearish on Small-Cap Growth.

In an environment of trade uncertainty, investors may rotate into low-volatility sectors that are less exposed to tariffs and avoid high-beta small-cap growth stocks, like the Russell 2000 Index. We’re talking about essential consumer goods, financials, and utilities, 78% of which have localized their supply chains within the US. In contrast, over 35% of small-cap growth firms remain heavily reliant on cross-border supply chains, with revenue risk exceeding 10% in some cases.

Bullish on Staples, and Bearish on Discretionary.

In Q1, US active funds have begun rotating into consumer staples like food, retail, and household goods, while cutting exposure to discretionary sectors such as durables and apparel. With inflation still elevated and the risk of consumption downgrading ahead, we expect this trend to continue at least until the Fed begins rate cuts.

Bullish on Tech

US tech firms with global revenue exposure and minimal tariff risk are likely to benefit from fiscal and monetary easing. Also, Big Tech is still all-in on AI. In 2025, Amazon, Microsoft, Google, and Meta are expected to deploy over $300 billion in capex, with a major focus on AI infrastructure. AI’s structural advantage and tariff resilience may give these tech names a significant profit margin boost.

Now that we’ve covered sectors, let’s zoom in further into individual stocks.

New trade policies have created a clear divide. Some companies are heavily exposed, while others are relatively insulated or even well-positioned to benefit from the disruption. 

Depending on your risk appetite, here are two approaches:

1. An offensive strategy would consist of going long on a company that stands to benefit from the new tariffs, while shorting a company that is likely to suffer from them. This allows investors to capitalize on both sides of the policy shift, profiting from winners while betting against losers.
2. A defensive strategy, on the other hand, involves going long on a company that stands to benefit from the tariff shift, paired with a long position in a company that would typically be hurt by the tariffs. This provides a hedge against uncertainty, allowing investors to stay positioned for both outcomes.

For the first strategy we will use the cybersecurity sector as an example. The two industry giants there, CrowdStrike and Palo Alto, are seeing diverging investor sentiment. Even though both companies operate in the same space, their business models react differently to the tariff pressure.

CrowdStrike focuses on cloud-native, subscription-based endpoint and cloud security. Without relying on physical hardware products, it carries minimal exposure to tariffs. In contrast, Palo Alto derives nearly 20% of its revenue from physical product sales, especially its ML-powered Next-Generation Firewalls. This hardware exposure creates greater vulnerability to supply chain disruptions and cost pressure under a trade war scenario.

Historically, the two stocks have moved in close correlation. However, since Trump’s election in November, CrowdStrike has significantly outperformed Palo Alto, highlighting how even companies in the same industry can diverge based on tariff sensitivity.

For the second strategy we can see opportunities in ecommerce. 

Temu, the ultra-discounted platform under Pinduoduo, built its US success on low cost and direct-from-China shipping. However, its business model has come under severe pressure with the closing of the de minimis loophole, which previously allowed items under $800 to enter the US duty-free. With that loophole closed, Temu’s competitive edge is rapidly eroding. 

Meanwhile, ThredUp, a US-based secondhand fashion platform has emerged as a surprising winner. ThredUp’s inventory is sourced domestically, insulated from the tariff pressure. More importantly, the secondhand market is inherently countercyclical. As the economy slows and consumers become more price-sensitive, demand for resale platforms tend to rise.

Since the tariff announcement in early April, ThredUp’s stock has surged over 160%, while Pinduoduo is down 10%.

Conclusion

Uncertainty may dominate the headlines, but with the right tools, investors can turn it into an edge. Whether it’s defensive positioning or identifying asymmetric winners, the trade war has created both risk and opportunity. 

If you found this breakdown helpful, be sure to like the video, subscribe, and drop your thoughts in the comments, we’d love to hear what sectors or stocks you’re watching right now.

Stay informed, stay strategic, and we’ll see you in the next one!