What are tariffs and how do they affect stocks?

Tariffs are taxes imposed on imported goods, making them more expensive in the country applying the tariff. When the US threatens tariffs on Japanese products, Japanese companies may relocate production to countries like Mexico or Canada to avoid these extra costs. This benefits companies in those countries that provide manufacturing facilities, logistics services, raw materials, and other support services, potentially boosting their revenue and stock value.

What is nearshoring and why is it important for these stocks?

Nearshoring refers to moving production operations to nearby countries, rather than far away. In this case, Japanese companies are considering moving production from Japan to Mexico and Canada to be closer to the US market while avoiding potential tariffs. This is important for the stocks in this group because they provide the infrastructure, logistics, and materials needed for this manufacturing shift, which could lead to new business opportunities and growth.

Why are logistics and transportation stocks included in this group?

Logistics and transportation companies (like CP, UNP, XPO, and JBHT) are essential when manufacturing shifts to new locations. They move raw materials to factories and finished products to markets. As Japanese manufacturers relocate to North America, these companies will likely see increased volumes of goods moving through their networks, potentially boosting their revenue and profits.

How do tariffs between the US and Japan affect companies in Mexico and Canada?

When the US imposes tariffs on Japanese goods, Japanese manufacturers look for alternatives to maintain competitive pricing in the US market. Mexico and Canada have free trade agreements with the US through USMCA (formerly NAFTA), allowing goods produced there to enter the US without tariffs. This creates an incentive for Japanese companies to build factories in these countries, benefiting local suppliers, logistics providers, and industrial real estate companies.

15 handpicked stocks

Japan's Tariff-Driven Supply Chain Shift

As US tariffs threaten Japanese exports, manufacturers are looking to relocate production to tariff-friendly countries like Mexico and Canada. This carefully selected group of stocks represents companies positioned to benefit from this major supply chain realignment.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 30