As Donald Trump prepares to return to the White House, his planned tariffs against China stand to threaten multiple ETFs. Any funds that focus on sectors such as electric vehicles, clean energy, and infrastructure are likely to be compromised as Trump focuses public policy on areas such as fossil fuel production and oil drilling. This may leave many exchange-traded funds in the crossfire that previously enjoyed growth under the Biden administration’s pro-climate agenda.
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Three ETFs that Could Suffer Under Tariffs
Three Global X ETFs are likely to be negatively impacted by Trump’s tariffs due to their high exposure to the aforementioned sectors. TipRanks’ ETF Comparison tool enables the comparison of ETFs based on several parameters, including AUM (assets under management), funds flow, expense ratio, technicals, dividend analysis, and performance over different periods.
Of these three ETFs, the Global X U.S. Infrastructure Development ETF (PAVE) has displayed the best performance over the past three months. Its top holding by net asset, Trane Technologies (TT), has risen 84% over the past year. However, the home utilities provider is likely to struggle over the coming year if Trump’s tariffs raise the cost of construction materials, forcing Americans to scale back home construction projects. Many of the ETF’s holdings are in the construction and infrastructure space.
The second-best performer has been the Global X Lithium & Battery Tech ETF (LIT). This fund focuses primarily on EV battery technology and materials such as lithium. While its high Tesla (TSLA) position may be the ETF’s saving grace during Trump’s presidency, other top holdings, such as Chinese chipmaker NAURA Technology Group, may suffer if Trump’s tariffs make it difficult for it to export its chips to the U.S.
DRIV ETF May Surprise Investors
While the first two Global X ETFs are still in the green for the past six months, the Global X Autonomous & Electric Vehicles ETF (DRIV) is down 4%. It might seem as though a fund that focuses on EV investments is destined to struggle under an administration that doesn’t prioritize clean energy development. But this ETF’s positions include not just Tesla but tech leaders such as Nvidia (NVDA) and Alphabet (GOOGL), which could keep it elevated in 2024, despite its recent declines.
Wall Street is still moderately bullish on DRIV ETF. Analysts have a Moderate Buy consensus rating on it based on 48 Buys, 23 Holds, and five Sells, as indicated by the graphic below. After 6% gains over the past year, the average DRIV price target of $27.50 implies 18% upside potential.
