5 Beaten-Down ETFs to Play on Hints of Trade De-escalation

On April 22, 2025, Wall Street witnessed signals of easing trade tensions. President Trump and Treasury Secretary Scott Bessent both hinted that 145% tariffs on Chinese goods could be reduced in the near future. Markets responded positively with SPDR S&P 500 ETF SPY adding 2.6% on the day, SPDR Dow Jones Industrial Average ETF Trust DIA gaining 2.7% and Invesco QQQ Trust QQQ advancing 2.6%.

Bessent: Current Tariffs Are Unsustainable

Treasury Secretary Scott Bessent also struck an optimistic tone during a private investor summit, suggesting the current state of US-China tariffs is not viable in the long term. He echoed sentiments he shared in an earlier interview with Yahoo Finance, saying he expects more "clarity" on tariffs in the months ahead.

Meanwhile, Vice President JD Vance visited India on April 22, 2025. Discussions included cooperation in technology, defense, and energy, with the White House noting “progress” on several fronts.

Tariff Pauses and Exemptions Under Consideration

President Trump is also exploring pauses on certain tariffs, particularly on auto imports and some consumer electronics. While he insists tariffs will eventually be enforced, the administration is leaving room for temporary exemptions. Despite the discussions, the 10% baseline tariff on affected imports into the United States—introduced on April 5—remains in effect.

US-UK Trade Talks: Auto Tariffs May Be Cut

The Wall Street Journal reports the United States is considering reducing auto tariffs on UK exports from 10% to 2.5% as part of ongoing trade negotiations. British Finance Minister Rachel Reeves is scheduled to meet with Secretary Bessent to advocate for a broader agreement that would reduce or eliminate Trump's previous tariffs on British goods, as quoted on Yahoo Finance.

5 Beaten-Down ETFs to Play

Against this backdrop, below we highlight a few exchange-traded funds (ETFs) that have a Zacks Rank #1 (Strong Buy) and are beaten-down over the past month. These ETFs have greater scope for outperformance if trade tensions de-escalate.

VanEck Semiconductor ETF SMH – Down 16.4% Past Month; Up 2.2% on April 22

Amplify Bloomberg AI Value Chain ETF AIVC – Down 16.9% Past Month; Up 3.0% on April 22

U.S. Global Jets ETF JETS – Down 16.3% Past Month; Up 2.3% on April 22

iShares U.S. Oil & Gas Exploration & Production ETF IEO – Down 15.3% Past Month; Up 2.7% on April 22

First Trust NASDAQ-100-Technology Sector ETF QTEC – Down 13.4% Past Month; Up 2.4% on April 22

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This article originally published on Zacks Investment Research (zacks.com).

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