Markets were rocked by Trump's tariffs, but who benefited and who lost?

The market was shaken by the US president's "Liberation Day" speech, which caused the S&P 500 to drop more than 12 percent in a single week

Certain businesses were more protected than others.

Voters were aware that significant changes were ahead when Donald Trump was elected president of the United States for a second time.

The US's foreign policy goals underwent a significant change under his new administration, and almost every branch of government was shaken up.

A new tariff regime that is already altering the face of international trade, however, was the most important development for investors.

On April 2, Trump unveiled his Liberation Day tariffs, which included higher, so-called "reciprocal" tariffs on goods from nations with a trade deficit with the US in addition to a general 10% tariff on all imports.

Almost all of the components of the S&P 500, an index that tracks the performance of 500 of the biggest companies in the United States, turned red as soon as trading started the next day.

With time passing without the US president reversing course, the decline grew worse, with the S&P 500 plunging more than 12% on its worst day on April 8.

Fortunately for investors, markets surged after Trump announced on April 9 that the so-called "reciprocal tariffs" would be paused for 90 days.

Following a rally that saw an almost 11% increase from its low on April 9 to the end of trading on April 28, the S&P 500 is currently about 2 points 5 percent lower than it was prior to Liberation Day.

Naturally, there are winners and losers after a hectic month for the markets. We examine which businesses benefited most from Trump's tariffs and which ones took advantage of the chaos.

Who benefited the most from Trump's tariffs?

Investors in gold.

Before the announcement of Trump's tariffs, gold investors were already enjoying themselves greatly, as the price of the metal had risen sharply to about £3,500 in recent months.

Gold gained more strength after the announcement of the new tariff regime.

On April 2, gold was trading at about £3,126 per troy ounce. On April 7, this dropped precipitously to £2,967, but it then surged back up, momentarily crossing the £3,500 mark on April 22.

Dan Coatsworth, an investment analyst at AJ Bell, said that this increase was probably due to the fact that gold is typically a safe-haven asset that tends to appreciate in value during downturns.

"Historically, when things were uncertain, investors have exposed themselves to more gold, and it's safe to say that Liberation Day will be remembered as a moment that completely upended the world.

He continued, "Many investors sought so-called safe-haven investments as a result of widespread uncertainties regarding the true economic impact of higher tariffs."

According to Coatsworth, the increased price of gold will also benefit businesses that produce the metal.

Investors will be counting on gold miners to benefit from significantly higher cash flows and profit margins in the near future due to the surge in the price of the precious metal, he said, even though tariffs may eventually drive up the cost of services and equipment to support gold extraction.

Supplies for defense.

The two weeks after Liberation Day saw a boost in the stock prices of numerous defense companies, which were already benefiting from higher defense spending in Europe.

The stock of US companies such as Palantir Technologies increased by about 6% during that time, and the stock of defense giant Lockheed Martin increased by 53.4 percent, making them the fourth and sixth largest increases in the S&P 500.

"The earnings outlook for defence contractors has improved as a result of governments around the world pledging to increase defence spending," Coatsworth says.

Additionally, he points out that since defense spending is usually expressed as a percentage of GDP, "it would be incorrect to assume that Trump's tariffs would have zero impact on the sector because of how tariffs can lead to economic weakness," he says.

"Governments are unlikely to suddenly lower defense spending if they see a slowdown in GDP growth," writes Coatsworth, suggesting that the impact of this could be exaggerated.

However, this increase in defense stocks is not unique to the United States. Following the tariff announcement, stock prices of the UK's own defense companies also increased; between April 2 and 10, BAE Systems' stock increased by 10.9%.

Source: ShareScope, AJ Bell.