American stocks have crashed this year, and are continuing to lag behind their global peers in countries like Germany, France, and China. This performance may continue next week when Trump implements his Liberation Day tariffs, triggering a trade war.
Investing in quality blue-chip ETFs can be a good way to prepare for these tariffs. This article highlights some of the best ETFs to buy and hold ahead of these tariffs, and what to expect.
Blue-chip ETFs to buy ahead of tariffs
Some defensive ETFs will do well when Trump implements his tariffs. The most notable names are the SPDR Gold Shares ETF (GLD), Vanguard Utilities ETF (VPU), Vanguard Health Care ETF (VHT), and Vanguard Consumer Staples ETF (VDC).
SPDR Gold Shares ETF (GLD)
The GLD ETF is one of the best blue-chip ETF to buy as the trade war intensifies. It has already jumped by over 17% this year and over 38% in the last 12 months and is hovering near its all-time high.
Gold will be a good asset to buy as more investors move to its safety because of the rising risks. Also, the ongoing tensions between the US, its allies, and foes will see more companies abandon the dollar and move to its safety.
Further, the GLD ETF may do well when the Federal Reserve starts to cut interest rates later this year to deal with a potential recession.
Vanguard Utilities ETF (VPU)
Utilities are some of the best assets to invest in times of economic issues because customers always buy them. Homeowners will always pay for their water and electricity bills, meaning that many of these firms will keep doing well.
The VPU ETF is one of the best funds to invest in during a recession. It is a cheap ETF with an expense ratio of 0.09%, making it highly affordable. It tracks 69 companies and has an average P/E ratio of 20.2x.
Most companies in the VPU ETF are in the electric utilities, followed by gas utilities, independent power producers, and water utilities. Popular names in the fund are NextEra, Southern, Duke Energy, Constellation Energy, and American Electric Power. The VPU ETF has a 3% yield and has jumped by 3.5% this year.
Read more: 5 Best Utility Stocks to Buy for Q1 2025
Vanguard Health Care ETF (VHT)
The healthcare sector will always be a good defensive area to park your money because of the rising demand of drugs. Also, most people in the US don’t pay for medicine out of pocket. Instead, they rely on private insurance and the government.
The VHT ETF is a cheap fund to invest in because of its exposure to the healthcare sector. It holds 413 companies spread across areas like biotechnology, healthcare equipment, managed health care, pharmaceuticals, and healthcare facilities.
The biggest companies in the VHT ETF are Eli Lilly, UnitedHealth Group, AbbVie, Johnson & Johnson, Merck, and Intuitive Surgical. The fund will likely continue doing well this year. The risk, however, is that it has exposure to many biotech companies that are often volatile. It is also an expensive fund with a price-to-earnings ratio of 30.
Vanguard Consumer Staples ETF (VDC)
The Vanguard Consumer Staples ETF (VDC) is another good fund to invest when Trump’s trade war starts. Companies in the consumer staples industry often do well in all market conditions since customers buy their products in market conditions.
The VDC ETF tracks the biggest companies in the industry. The biggest category in the fund is merchandise retail, household products, soft drink & non-alcolic beverages. Some of the top firms in the fund are Costco, Walmart, P&G, Coca-Cola, PepsiCo, and Philip Morris.
Other ETFs to buy
There are other top blue-chip ETFs to buy when the trade war starts. The most notable ones are the Schwab US Dividend Equity ETF (SCHD), VanEck Morningstar Wide Moat (MOAT), and Pacer US Cash Cows 100 ETF (COWZ).
Read more: COWZ vs CALF vs BUL: Which free cash flow ETF is better to buy?
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