What are tariffs and how do they affect stocks?

Tariffs are taxes imposed on imported goods, making them more expensive for consumers. When the U.S. places tariffs on Japanese products, those products cost more in American stores. This creates a price advantage for competing companies from other countries who don't face the same tariffs. Stocks of these competing companies may rise as investors anticipate they'll gain customers and market share from their Japanese rivals.

Why is the Nikkei index important when considering these stocks?

The Nikkei 225 is Japan's major stock market index, similar to the S&P 500 in the U.S. When it declines due to tariff concerns, it signals that investors are worried about the future profitability of Japanese companies. This same worry is what creates the opportunity for the non-Japanese competitors in this stock group, as they stand to benefit from challenges facing Japanese corporations.

What is an "event-driven" investment strategy?

An event-driven strategy means investing based on a specific event or catalyst that could move stock prices. In this case, the potential event is U.S. tariffs on Japanese goods. This approach differs from long-term strategies that focus on a company's fundamental growth or value. Event-driven investing requires timing your investments around specific developments in politics, regulations, or business deals that could create short to medium-term opportunities.

What sectors are most affected by potential Japan-U.S. trade friction?

The three main sectors highlighted in this stock group are automotive (companies like Tesla, GM, and Ford), electronics (such as Samsung, LG, and semiconductor firms), and apparel (including Gap, Zara, and H&M). These sectors are where Japanese companies like Toyota, Sony, and Uniqlo have strong global presence. If tariffs are imposed, these specific industries would see the most direct competitive shifts.

16 handpicked stocks

Rivals to Japan Inc.

A collection of international companies that could benefit from U.S. tariffs on Japanese goods. These carefully selected stocks represent direct competitors to major Japanese exporters in automotive, electronics, and apparel sectors.

Han Tan | Market Analyst

Updated 2 days ago | Published at juillet 1