Stocks have fallen sharply in the aftermath of President Donald Trump 's tariffs, but there are some names that may ultimately benefit as companies return operations to the United States, according to two financial firms. Trump vowed to bring factories and jobs back to the country when he signed a sweeping tariff policy on Wednesday. It includes reciprocal tariffs that begin at 10%, and rise higher for certain countries. On Friday, China retaliated by slapping 34% levies on all goods imported from the U.S. Reshoring, or the return of companies' overseas operations to the U.S., isn't that simple due to uncertainty around the final levies and how long they will last, as well as issues surrounding finding workers and updating infrastructure, experts said. However, there are some names that may eventually walk away winners. Right now, Morgan Stanley analyst Chris Snyder sees a competitive advantage for U.S. industrials that have production in Mexico. Trump excluded both Mexico and Canada from the tariffs announced on Wednesday, which means that USMCA-compliant goods will continue to have 0% levies. Industrials are over indexed to Mexico, while consumer companies are heavily in Asia, he pointed out. That suggests less tariff inflation on industrials and therefore, less risk of demand destruction, he said. The top beneficiary of Mexico's exemption is Acuity , Snyder said. The Atlanta-based industrial technology company provides light fixtures and building controls. "The competition is Asia based and will face substantial incremental tariffs," Snyder said. AYI YTD mountain Acuity He has an overweight rating on the stock and a $370 price target, which implies 44% upside from Thursday's close. Shares are down about 21% year to date. Short-term risk Snyder anticipates Trump's tariffs will be a positive catalyst for reshoring, but in the near-term investments will be smaller and focused on quick turnarounds, not a "massive wave." He also sees a short-term risk for the country's manufacturing production economy because companies have built up inventories since the election in anticipation of the levies. "This looming short-cycle 'air pocket' could be deepened by an expectation that tariff rates could be negotiated lower – why buy now if you have excess stock and the price could be going lower?" Snyder wrote in a note Friday. The most at risk are those exposed to supply chains in Asia and Europe, where negotiations could begin, he said. Right now, he likes short-cycle exposure that is less tied to the consumer and where there are signs of order improvement even prior to the November election. That includes one of his top reshoring picks, Rockwell Automation . The company is the leader in American factory automation, Snyder said. Its biggest driver is the investment in U.S. manufacturing capital expenditures, which should finally be turning around, he said. "The market is returning to growth and that gives a lift to their future growth and earning power," Snyder said. ROK YTD mountain Rockwell Automation His $345 price target suggests 44% upside from Thursday's close. $10 billion reshoring opportunity When businesses are ready to build their next project, they are now more likely to come to the United States, Snyder believes. "The sheer magnitude of the tariffs should help US take share of global investment - the US accounts for ~30% of global consumption and thus will remain an important market to serve," he wrote in a note Thursday. That is in line with his thesis that the country is in the early innings of a multidecade, $10 billion re-industrialization opportunity that will restore growth to the U.S. industrial economy. His other preferred reshoring stock, in addition to Rockwell Automation, is Eaton . ETN YTD mountain Eaton Eaton is the biggest provider of electrical systems and power management solutions in the country, he said. It should benefit from the increased construction of facilities and connecting them to the grid. "Investment in the industrial economy will require a lot of investment in power to support that," he noted. His price target of $385 suggests the stock can move 48% higher from Thursday's close. Crisis of confidence, eventual opportunity Societe Generale also sees several reshoring opportunities, but expects some pain first. Manish Kabra, head of the firm's U.S. equity strategy, is concerned about the drop in consumer confidence. "When you have a crisis of confidence, the confidence of global companies that have announced investments in the U.S., they are going to pause," he said. "Unless we solve the crisis of confidence, the potential investments, the announced investments will not happen at a fast pace. It will slow down." Kabra hopes the highest level of tariffs are a negotiation tool and don't cause a downturn in 2025. If the tariffs are negotiated, he expects the "crisis of confidence" to ease by the summer or the end of the year. If so, his basket of reshoring stocks will "come out much, much better." "If this whole big picture idea is America first and American manufacturing jobs, then this is the basket — these are the stocks they have to work." Here are some of those names. One global supply chain play is Union Pacific , which connects over 23 states by rail. The stock has an average analyst rating of overweight and 24% upside to the average price target, according to FactSet. Deutsche Bank initiated coverage of the stock in March with a buy rating. Analyst Richa Harnain said Union Pacific's operating margin and rate of return on invested capital makes it stand out among its peers. Shares are down 4% year to date. One real estate investment trust, Prologis , made the cut. The company owns industrial properties, such as warehouses, and has been focusing on data centers , which should benefit from the artificial intelligence boom. Prologis has an average analyst rating of overweight and has nearly 36% upside to the average price target, per FactSet. Meanwhile, Steel Dynamics is expected to be a beneficiary of the steel and aluminum duties Trump put into effect in March. The stock was upgraded by UBS to buy from neutral late last month. Analyst Andrew Jones said the tariff protections exceeded his expectations and resulted in a significant rally in hot-rolled coil steel. "At the same time, the stock has sold off and de-rated with the sell off in the broader market on the escalating trade war," he wrote in a March 24 note. "We think any demand downside is likely to be partly offset by reshoring efforts (inc 25% on downstream goods) and the import protection is more significant." The stock has an average analyst rating of overweight and about 37% upside to the average price target, FactSet data show. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles, and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
