How to protect yourself against trade wars: The stock market faces numerous challenges in 2026, with trade policy remaining a key concern.
The constant stream of—at times contradictory—trade measures coming from the White House is sowing confusion among investors regarding import/export rules and tariffs. Meanwhile, the war in Iran, now in its seventh month, continues to disrupt global energy markets.
For investors, the challenge lies not in predicting the next tariff announcement—an impossible task—but rather in building a portfolio capable of withstanding various scenarios and remaining resilient in the face of trade-related uncertainty.
The seven exchange-traded funds (ETFs) featured below employ widely different strategies—ranging from physical assets to tactical stock market bets—yet all are well-established funds with significant assets that merit consideration. While none of these investments offers a perfect hedge against a trade war, each can reduce exposure to a specific source of risk:
iShares MSCI India ETF (INDA)
If you are concerned about trade relations between the U.S. and Canada or the long-term dynamics between the rest of the world and China, a simple way to mitigate the impact of a trade war is to diversify your investments away from the economies most deeply involved in these conflicts. The INDA fund offers exposure to a major, rapidly growing economy driven more by domestic consumption than the export-oriented markets found elsewhere in Asia. India has also benefited from the “China Plus One” trend, as multinationals seek to diversify their manufacturing operations and supply chains away from China. That said, India does experience trade tensions with the U.S., and emerging market equities can be volatile. However, with projected GDP growth of around 6.5% in 2026, it is difficult to argue that India is being held back by current geopolitical challenges.
The iShares US Aerospace and Defense (ITA) fund
Conflict in Iran has kept defense spending high, given the U.S. need to replenish its arsenal. Due to its low reliance on consumer demand, the ITA represents an attractive investment option in the defense sector—a deliberate play on words—especially considering the impact of trade tensions on other sectors that are more sensitive to economic conditions. The fund comprises around fifty companies, allowing investors to diversify their portfolios, as not all defense stocks benefit equally from every international conflict or government contract. If military conflicts concern you as much as trade wars, the ITA is a prudent addition to your portfolio.
The iShares MSCI US Minimal Volatility (USMV) fund
This fund, which focuses on the minimum volatility factor, takes a different approach to hedging against trade wars. Instead of concentrating on the defense sector alone, the fund holds a broad portfolio of U.S. companies that have historically exhibited lower volatility than the market as a whole. Its investments generally focus on sectors such as healthcare, consumer staples, and utilities, where revenues are stable and earnings are less affected by economic cycles. This low-volatility strategy allows investors to benefit from stock market gains without the significant market risk associated with a traditional ETF heavily concentrated in overvalued AI stocks or sensitive cyclical stocks. However, the USMV has one major drawback: its performance may lag behind the average during periods of strong stock market growth. Nevertheless, for investors looking to preserve their investments while minimizing portfolio volatility, this trade-off may prove prudent.
SPDR Gold (GLD)
Gold—a sought-after safe-haven asset during times of uncertainty and inflation—has seen strong investor demand over the past two years. As a fund backed by physical gold that tracks the metal’s price rather than the stock prices of mining companies, GLD benefits significantly from uncertainty surrounding trade policy and the enduring appeal of this tangible asset. Gold prices have risen 16% over the last twelve months, and ongoing uncertainties regarding tariffs, shifting trade rules, and geopolitical tensions continue to drive investors toward the gold market in 2026. Unlike most companies, gold is not tied to corporate earnings or directly linked to global supply chains, which offers an advantage during periods of uncertainty. However, this can be a disadvantage during times of growth and innovation on Wall Street. Since gold generates neither dividends nor income payments, it may not be the ideal choice for an investment focused on fundamental growth. Nevertheless, its appeal lies in its outlook—which differs fundamentally from that of equities—and the diversification opportunity it provides through an asset not directly correlated with other market factors.
SPDR Utilities Fund (XLU)
Investing in utilities is considered one of the safest investment options, and XLU is the largest utilities-focused exchange-traded fund (ETF) on Wall Street. These energy companies benefit from relative protection against macroeconomic fluctuations—such as trade wars—thanks to highly stable underlying energy demand and strong competitive advantages that shield them. These companies operate in a strictly regulated environment and require significant capital investment. Many utility companies also pay attractive dividends, and XLU offers a yield of approximately 3%, further enhancing its appeal as a safe investment. Of course, the sector is not entirely immune to volatility and other factors.