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- Tariffs As Territory Leverage Is a Whole New Level of Trade War Energy
Tariffs As Territory Leverage Is a Whole New Level of Trade War Energy
Noah Zelvis
January 25, 2026
We have seen tariffs used for trade deals and domestic pressure.
This week’s twist is different: tariffs as leverage for territory and security goals.
That is not a normal trade spat, that is the geopolitical version of bringing a flamethrower to a price negotiation.
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The core idea here is that if tariffs become a tool to force strategic outcomes, the incentives and the endgame change.
Why this is different
Traditional tariff fights are usually about money, jobs, and bargaining over market access. Pain is the point, but the goal is still economic.
This Greenland angle turns tariffs into a strategic weapon aimed at allies, not rivals, tied to national security and territory. That makes it harder for the other side to fold, because countries will eat economic pain before they give up sovereignty.
The leverage is real, but it is not free
The U.S. is so much larger than Denmark and several European economies that it can create real pressure quickly. But there is a catch that matters for markets: tariffs rarely land cleanly on foreigners. A big new study out of Europe argues Americans absorbed about 96% of the cost of recent U.S. tariffs, with foreign exporters eating only about 4% through lower prices. If that pattern holds, tariffs behave less like a foreign tax and more like a slow drip on U.S. consumers and corporate margins.
Why markets have stayed calm
Markets can shrug for a while because:
People assume legal and political constraints will limit how far this goes.
Investors are also anchored to the idea that the Fed cuts rates if growth wobbles.
And uncertainty often takes time to show up in earnings, price tags, and bond yields.
But if tariffs shift from negotiation tool to strategic punishment, expect:
More headline risk
More retaliation risk
More inflation noise over time
More volatility in rates, because bond investors hate unclear policy rules
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Actionable Stuff
Do not treat this like a normal tariff cycle. The incentives are different when the goal is geopolitical.
Favor companies that sell to governments or benefit from security spending. Those budgets move slower and are less price sensitive.
Watch for second order inflation. Even if consumer prices do not spike immediately, margins can get squeezed first.
Prefer domestic supply chain winners. If trade gets messier, local capacity and critical materials matter more.
Scale in, do not swing. This is a headline driven tape and it can reverse in a single press conference.
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Top Picks
Palantir (NYSE: PLTR)
If tariffs are becoming a geopolitical lever, governments and defense agencies will want better visibility into supply chains, procurement, and risk. Palantir sits right in that lane. The company tends to benefit when national security priorities rise and when organizations need to integrate messy data fast. In a world where allies argue, trade routes shift, and policy changes weekly, the value of decision software goes up.
Why it fits this setup:
More geopolitical friction usually means more demand for analytics, planning, and operational intelligence.
Government spending is less tied to the consumer cycle than most corporate budgets.
If supply chain disruption becomes a feature, not a bug, platforms that help manage complexity can stay sticky.
What to watch:
Government contract momentum and any commentary on international expansion.
Margin discipline, because valuation stories get punished fast if growth slows.
Lockheed Martin (NYSE: LMT)
When strategic tensions rise, defense primes are the classic steady beneficiaries, even when the macro mood is shaky. Lockheed is a clean way to play a world that is rearming, modernizing, and treating security as a budget priority again. If Europe starts thinking more seriously about NATO commitments and deterrence, that usually supports demand, even if the politics look chaotic.
Why it fits this setup:
Defense spending tends to climb when strategic uncertainty rises.
The company’s program mix and backlog dynamics can help smooth out economic turbulence.
It is a way to get exposure to geopolitics without needing to predict which tariff headline lands next.
What to watch:
Backlog trends and delivery cadence.
Any sign of procurement delays, which can happen when governments get distracted by politics.
MP Materials (NYSE: MP)
If this turns into a more strategic trade war, critical minerals become a bigger deal fast. Rare earth supply chains are one of the most sensitive choke points in modern industrial policy. MP is a domestic angle on that theme. It is not a low volatility stock, but it is directly tied to the idea that countries will pay up for supply chain security when they stop trusting the global system to behave nicely.
Why it fits this setup:
Tariff pressure and export controls tend to elevate the value of domestic sources.
Strategic competition increases the urgency around defense tech, electrification, and industrial inputs.
The market often reprices critical mineral exposure when policy risks rise.
What to watch:
Pricing, execution, and any announcements tied to downstream processing capacity.
Policy support and customer agreements, because this theme works best when demand is contracted, not just hoped for.
Costco (NASDAQ: COST)
This one is the sneaky hedge. If tariffs function like a consumption tax on Americans over time, households lean harder into value. Costco tends to do well when consumers are annoyed, because membership value becomes more important when people feel squeezed. If grocery inflation stays sticky while tariffs add background pressure, Costco is a practical, defensive way to stay exposed to consumer spending without relying on luxury behavior.
Why it fits this setup:
Trade down behavior supports bulk buying and private label.
Strong traffic and membership economics can help cushion margin pressure.
If uncertainty rises, dependable staples businesses often hold up better than discretionary names.
What to watch:
Membership renewal trends and commentary on food cost inflation.
Any margin compression signals from input costs and freight.
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Bottom Line
This is not just another tariff threat. It is tariffs being framed as geopolitical leverage, which raises the stakes and makes outcomes harder to negotiate cleanly. If this path continues, expect more volatility, more policy risk, and a greater premium on security spending and resilient business models. The clean positioning is a barbell: own defense and strategic infrastructure winners on one side, and value based consumer staples exposure on the other, while you avoid areas that depend on calm globalization to keep margins stable.
That’s it for today’s edition—thanks for reading! Reply to this email with any feedback or let me know which macro trends or markets you’d like me to cover next.
Best Regards,
—Noah Zelvis
Macro Notes