Trump’s Trade War Is Good For These 3 Dividend Stocks

The US v. China trade war is heating up.

Until recently, the nations appeared to be making progress. That was until President Trump raised tariffs on $200 billion in Chinese imports from 10% to 25%.

The news sent the S&P 500 down 3% in the next two trading days. But not all stocks suffered. That’s because some stocks actually benefit from tariffs.

I’ll show you why in a moment—and share a few stable, dividend-paying stocks set to benefit as this all plays out.

How Tariffs Work

A tariff is a tax on imported goods. Governments use them to make foreign goods less attractive and domestic goods more competitive.

Take steel, for example. Last year, Trump slapped a 25% tariff on Chinese steel imports. At the time, Chinese steel cost $800 per ton. US steel cost $900.

Once the tariff went into effect, it raised the overall cost of Chinese steel for US buyers to $1,000 per ton. As you’d expect, US automaker Ford Motor Company (F) buys a lot of steel. And before the tariff, it bought a lot of it from China because it was cheaper. Now Ford buys from US companies like Nucor Corp. (NUE), the largest US steelmaker.

Nucor loves the steel tariff. The company’s CEO said 2018—the year the tariffs went into effect—was “a record year for Nucor.”

Ford is less enthusiastic. The tariffs cost the car maker $750 million in 2018. But that’s how US tariffs work. They help some domestic businesses. And hurt others.

In China, however, everyone is feeling the pressure.

A One-Sided Relationship

The US and China have the world’s two largest economies. And they trade a lot… $780 billion worth of goods in 2018.

Still, it’s a one-sided relationship. In 2018, the US bought $660-billion worth of Chinese goods. But China only bought $120-billion worth of US goods. In other words, the US buys five times as much from China as China buys from the US. So Trump’s tariffs have put a lot of heat on China’s economy and financial markets.

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