3 Stocks to Buy That Could Protect Your Portfolio From President Donald Trump's Tariffs

On April 2, President Donald Trump enacted the highest U.S. tariffs since 1910. With a baseline tariff of 10% on all goods brought into the country and much higher tariff rates for dozens of specific countries, the tax on imports was far higher than most experts expected.

Even after the announcement, uncertainty remains. China already announced retaliatory tariffs, and the European Union is planning countermeasures against the United States' 20% tariff against the countries in its economic union. Meanwhile, U.S. Treasury Secretary Scott Bessent warned countries not to retaliate. "If you retaliate, there will be escalation," he said in an interview following President Trump's announcement.

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Investors searching for safe havens amid the intensifying trade war should look to companies with limited international operations. If trade policies slow the economy, possibly bringing on a recession, investors will want to own companies that provide consumer staples or lower-cost substitutes. These three stocks look like they could protect your portfolio amid the Trump tariffs.

Image source: The White House.

1. T-Mobile

T-Mobile (NASDAQ: TMUS) is one of the biggest wireless carriers in the United States, and its share of the market is getting bigger. It's a relatively focused company that offers wireless phone and home internet connectivity. Its business is insulated from the direct impacts of tariffs, and its services are those most consumers won't give up easily.

After merging with Sprint in 2020, T-Mobile has continued to gain market share while extracting synergies from the combination. The result has been a rapid increase in free cash flow, which totaled $17 billion in 2024, up from $13.6 billion in 2023. Management forecasts $17.3 billion to $18 billion in free cash flow this year. For reference, that's better than AT&T (NYSE: T) and roughly in line with Verizon Communications (NYSE: VZ).

T-Mobile appears better positioned than its two biggest competitors. While AT&T and Verizon have offered big promotions on new devices to attract new customers so far in 2025, T-Mobile hasn't been nearly as aggressive. Management's 2025 outlook in January called for nearly as many postpaid subscriber additions this year as last year. That could mean T-Mobile is exhibiting relative outperformance compared to its rivals.

T-Mobile is using most of the cash it generates to return capital to shareholders, primarily through share repurchases, but it instituted a relatively small dividend in 2023 and plans to grow it by about 10% per year. Unlike AT&T and Verizon, it isn't strapped with big piles of debt or committed to a big dividend. That gives management more flexibility to deploy cash strategically, given the opportunity.

Investors will have to pay a premium for the premium company, though. T-Mobile shares trade for an enterprise value-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio of 11.2. That's well above AT&T (7.4) and Verizon (6.6). But the stock is worth the price, especially in a market where it's protected from much of the political turmoil unfolding.

2. CarMax

President Trump instituted a 25% tariff on all auto and auto parts imports in late March. As a result, analysts expect the price of new cars to climb anywhere from $3,500 to $16,000, depending on the make and model. That could end up driving strong demand for used cars as a lower-cost alternative.

CarMax (NYSE: KMX) is the largest used-vehicle dealer in the U.S. It's been operating since 1993, and it brings a different approach to used cars than seen elsewhere. It provides customers with transparency, and its salespeople receive a flat commission on each sale. That provides a great level of trust with customers, which few other car dealerships have been able to match despite efforts to copy its model. CarMax's long history gives it a significant data advantage as well, which can help it acquire and manage inventory more efficiently than competitors.

Instead of targeting a gross margin percentage, CarMax aims to generate a set gross profit per retail unit. Over the last three quarters, it's been able to maintain that level around $2,300 per vehicle. Sticking with that game plan should allow it to continue growing earnings if demand shifts to used vehicles, and CarMax will be able to offer better pricing thanks to its data advantage and business model.

However, the tariffs do come with risk for CarMax. If the policies push the entire economy into a recession, consumers may be more likely to try to hold onto their cars longer instead of buying a "new to them" vehicle. That could offset any increases in demand from higher new car prices. That could prove challenging, as acquisition costs increase while the company maintains significant debt on its balance sheet.

Investors can buy the stock for less than 20 times forward earnings as of this writing. If the tariffs stick and drive greater unit sales for CarMax, that price could prove a bargain as CarMax leverages fixed costs to improve profit margins.

3. General Mills

Tariffs will impact a lot of the items you buy at your grocery store, some more than others. Fresh produce from countries like Mexico will likely see significant price increases. Even staples like cereal, snacks, and pet food will have to increase prices. That could benefit companies with the strongest brands in those categories, such as General Mills (NYSE: GIS).

General Mills has several very strong brands in the grocery aisles, including Cheerios and Pillsbury. Historically, it has been found that those brands are insulated from inflationary pressure, and shoppers refuse to trade down to private labels or other low-cost competitors. That means it can maintain strong gross margins while competing food companies may need to cut margins as their supply chains become more expensive.

That's evidenced in General Mills' gross margin of around 35% over the past 12 months compared to competitors with gross margins of around 29%. General Mills' scale also gives it an operating cost advantage over its competitors, enabling it to drive efficiencies in distribution and advertising. As a result, it also has a significantly higher operating margin than its closest competitors.

Despite declining sales over the last couple of years, management is optimistic that the trend will turn around in fiscal 2026. It's increasing its investment in new products and advertising. At the same time, it's managing costs to ensure margin expansion, expecting to deliver 5% cost savings in cost of goods sold. (Tariffs could negate that, but it still puts it in a strong position to absorb them.)

Analysts aren't expecting much from the company, with the consensus calling for a 2% drop in earnings per share in fiscal 2026. However, General Mills is well-positioned to provide stable returns for investors amid a period of uncertainty. The stock trades for less than 15 times analysts' consensus for 2026 earnings and 1.7 times sales expectations. That's a fair price for the consumer staples stock.

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Adam Levy has positions in CarMax. The Motley Fool has positions in and recommends CarMax. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.