What are tariffs and why do they affect the Federal Reserve's decisions?

Tariffs are taxes on imported goods that can drive up prices for consumers, creating inflation. The Federal Reserve is concerned because tariff-induced inflation can spread throughout the economy, making everyday goods more expensive. This forces the Fed to keep interest rates higher to control inflation, even if it means potentially slowing job growth.

Why are domestic companies better positioned during tariff disputes?

Domestic companies rely less on international trade and imported materials, so they're naturally protected from tariff impacts. They have local supply chains and serve local customers, which means they can maintain stable operations and pricing even when international trade becomes more expensive or uncertain.

What does 'pricing power' mean for these companies?

Pricing power means a company can raise its prices without losing customers. Companies providing essential goods or services often have this advantage because people still need what they offer, even if prices go up. This helps them maintain profits during inflationary periods when their costs might also be rising.

How does the Fed's interest rate policy affect these stocks?

When the Fed keeps interest rates high to fight inflation, it makes borrowing more expensive for all companies. However, domestic-focused companies may be less affected because they're not dealing with the additional costs and uncertainties of international trade that prompted the Fed's cautious stance in the first place.

What does 'Market Cap' tell me about a company?

Market Cap (market capitalisation) is the total value of all a company's shares. It's calculated by multiplying the share price by the number of shares outstanding. A higher market cap generally indicates a larger, more established company, whilst a lower market cap suggests a smaller company that might have more growth potential but also more risk.

15 handpicked stocks

US Companies Shielded from Fed Tariff Stance 2025

The Federal Reserve is holding interest rates steady, signaling that tariff-induced inflation is a primary concern, even over potential employment risks. This creates an investment opportunity in companies that are insulated from international trade disputes and can maintain pricing power during inflationary periods.

Han Tan | Market Analyst

Updated 2 days ago | Published at August 21