The most recent round of tariff hikes that China and the United States are imposing on one another may be on hold for 90 days while the two nations negotiate new trade terms. But let's face it -- this is only a temporary reprieve. It's difficult to imagine either country backing down much, or much more than the other.
And that's just China. While many countries are in talks with the United States' international trade representatives to make palatable deals, many others are holding their ground and/or strengthening trade ties with partners other than the U.S. This makes it a tough time to bet on domestic companies that depend heavily on foreign suppliers, or foreign customers.
There's a handful of mighty American companies that can not only survive the tariff war, however, but perhaps even thrive from it. Here's a look at three of them.
1. Costco
What could be more American than a big-box store selling bulk-sized goods at a discounted price? Not much.
Enter Costco Wholesale (COST -0.82%).
It's not a strictly American company, for the record. It operates some stores overseas, and several in Canada. More than 600 of its nearly 900 locales are located within the United States though, making it a very American brick-and-mortar retailer that dates all the way back 1983.
This year's expected revenue growth of just under 8% is pretty typical of its long-term track record, in step with new store openings and membership growth that's now reached 78.4 million paid memberships and 140.6 million total cardholders. More than 90% of these paying members reliably renew their access every year, too, underscoring the retailer's appeal to consumers and corporate cardholders alike. This is just how lots of people shop these days.
But can Costco stand up to the swell of tariff uncertainty? It can, for a handful of reasons.
One of these reasons is where it sources most of its merchandise. While it does import some of it, about two-thirds of it comes from American suppliers. And, while the other one-third comes from foreign suppliers, less than half these imports come from China, Mexico, and Canada, three countries that seem to be the top target of the United States' recently upped tariffs.
To the extent Costco is vulnerable though, it's got options. As CEO Ron Vachris explained during the recent fiscal Q2 earnings conference call, "With our flexibility of the treasure hunt, there's not many items that we can't find something to replace or something else to bring in."
Another way Costco is standing up to the newly challenging environment is by leveraging its sheer size and scale.
While not nearly as big as Kroger or Walmart, Costco is certainly a big enough distributor of groceries to push back on suppliers' ever-rising prices. As Vachris confidently added during March's earnings call, "Our people are very well equipped to lower prices and defer any cost increases that come our way."
Vachris may be biased and a blatant cheerleader. He's not wrong, however.
2. Uber Technologies
Like Costco, ride-hailing outfit Uber Technologies (UBER -0.16%) isn't a purely American company. It does business all over the world, serving a total of more than 15,000 cities in 70 different countries.
The United States is its biggest and most important market, though, where it controls a commanding three-fourths of the ride-hailing industry, according to data from Bloomberg's data analytics arm, Second Measure. With this much reach already established, it's not apt to be dethroned by smaller ride-hailing rival Lyft anytime soon, if ever.
More to the point for interested investors, Uber stock is a buy because the company's tapped into a trend that's bigger than any tariff-induced turbulence it may run into.
Simply put, Americans are increasingly willing to pay for a ride in someone else's car, and decreasingly interested in driving themselves, or even owning their own vehicle. As of the Federal Highway Administration's most recent report on the matter, less than 40% of teens currently living in the U.S. now holds a driver's license, down from two-thirds this crowd 30 years ago. In a similar vein, a survey recently taken by Deloitte suggests that while only 11% of the 55-and-over crowd living in the U.S. would consider foregoing ownership of a vehicle on the future, 44% of the under-35 crowd would entertain the idea. Both data sets underscore a major cultural shift that's still underway -- a shift that has lots of room to continue running for years on end as America ages and younger generations act on what's normal to them. To this end, Uber's top line is expected to grow in the mid-teens for at least the next few years.
The kicker: While economic malaise stemming from higher tariffs isn't good for any business here or abroad, ride-sharing isn't directly impacted by higher import costs on physical goods. This is a service-based business done in America by American residents for American residents. It's also arguable that most of its rides and deliveries are a necessity rather than a discretionary choice, keeping Uber's business mostly intact regardless of any economic weakness.
Image source: Getty Images.
3. Berkshire Hathaway
Finally, add Berkshire Hathaway (BRK.A -0.16%) (BRK.B 0.11%) to your list of stocks of American companies to buy and hold amid the backdrop of tariff uncertainty.
It's well known for its collection of stocks, largely hand-picked by the Oracle of Omaha himself -- Warren Buffett. He's perpetually a big fan of America though, saying just earlier this month: "If I were being born today, I would just keep negotiating in the womb until they said I could be in the United States. We're all pretty lucky."
And his stock picks reflect this appreciation for American ingenuity and resilience. Berkshire's portfolio currently consists of Apple, American Express, and Occidental Petroleum just to name a few.
That's not what makes Berkshire Hathaway such a great means of sidestepping most of the adverse impact that recently raised import and export tariffs might have on the domestic economy, however. It's the privately held all-American companies that Berkshire Hathaway also owns that make this name a buy. See, Berkshire is also parent to Dairy Queen, Fruit of the Loom, Clayton Homes, railroad BNSF, Acme Brick Company, Pilot Travel Centers, GEICO insurance, Duracell batteries, flooring company Shaw, and more.
None of these are high-growth outfits, to be sure. But almost all of them can operate and even thrive quite independently of anything going on at and beyond the nation's borders. Given that these cash cows currently account for about one-third of Berkshire's total market cap (with its cash hoard of $348 billion making up another third), any investment in this ticker is an investment in a bunch of great U.S. brands that aren't investable any other way.
And for what it's worth, this combination of privately held and publicly traded companies works. Although Berkshire's performance can certainly trail that of the broad market for relatively long stretches, given enough time this ancient, value-minded stock-picking approach sill allows Berkshire Hathaway shares to outperform the S&P 500 (^GSPC -0.67%) in the long run.
