Everyone is panicking about trade wars. Honestly, if you glance at the headlines right now in early 2026, it feels like every company with a global footprint is one pen stroke away from a margin collapse. But here’s the thing: while the "Liberation Day" tariffs and the ongoing USMCA skirmishes have roiled the S&P 500, they’ve also created a massive mispricing.
Investors are throwing the baby out with the bathwater. They are selling off high-quality companies with "wide moats"—those structural competitive advantages that protect profits—simply because they belong to sectors that usually have high import exposure.
Finding undervalued moat stocks with limited tariff exposure isn't just about looking for companies that make stuff in the U.S. It’s about finding businesses that have the pricing power to shrug off cost increases or, better yet, service-based moats that don't rely on physical cross-border supply chains at all.
The Tariff Trap of 2026
We’ve seen this movie before, but the 2026 version has some nasty plot twists. The effective tariff rates on Chinese imports have climbed significantly, and the "import adjustment offset" programs—while helping giants like Ford and GM—haven't been the silver bullet everyone hoped for.
Most people think "moat" and they think of a big manufacturing plant.
Bad move.
In a high-tariff environment, a physical moat can become a liability if your raw materials are getting taxed at 20% or 30%. The real winners right now are the companies whose moats are built on data, specialized domestic infrastructure, or brand loyalty so fierce that consumers will eat the price hike without blinking.
Why Service-Based Moats are the Ultimate Hedge
Think about a company like Tyler Technologies (TYL). They provide software specifically for the public sector—think local governments, school districts, and courts.
Does Tyler Technologies care if there’s a 25% tariff on steel? Not really.
Their "moat" is high switching costs. Once a county installs Tyler’s software to manage their entire judicial system, they aren't going to rip it out because of a trade war in the South China Sea. Morningstar currently identifies Tyler as a wide-moat name that often trades at a discount when the broader market gets jittery about macro-politics.
Then you have the financial infrastructure plays. MarketAxess (MKTX) is a great example. They operate a leading platform for electronic bond trading. Their competitive advantage is a "network effect." The more traders use the platform, the more liquidity there is, which attracts even more traders.
Their "raw material" is data and code.
Tariffs? Irrelevant.
Yet, when the market sees "Industrial" or "Financial" sectors dipping on trade news, these stocks often get dragged down regardless of their actual exposure.
The Domestic Infrastructure Play: Huntington Ingalls (HII)
If you absolutely must own a company that builds physical things, you want to look at Huntington Ingalls Industries.
HII is the largest independent military shipbuilder in the United States. They build the Navy’s aircraft carriers and nuclear submarines.
Talk about a moat. You can’t exactly "outsource" the construction of a Virginia-class submarine to a low-cost overseas competitor for national security reasons.
Because their primary customer is the U.S. government and their supply chain is heavily domestic by mandate, they are largely insulated from the tariff volatility hitting consumer electronics or automotive players. As of early 2026, HII has been highlighted by analysts as a value play in the industrial sector, specifically because its "moat" is reinforced by federal law and long-term defense contracts that span decades.
Consumer Staples: The Pricing Power Test
Kinda counterintuitive, but some consumer staples are actually safer than they look. Look at Altria (MO) or British American Tobacco (BTI).
I know, tobacco isn't exactly a "feel-good" investment. But from a cold, hard financial perspective, these companies have legendary pricing power. If a tariff increases the cost of a pack of cigarettes by 50 cents, most smokers just pay it.
Furthermore, a significant portion of their production for the U.S. market happens within the U.S. using domestic tobacco. Altria’s moat is built on brand intangible assets and a massive distribution network that is incredibly hard to replicate. With a dividend yield that’s currently hovering in the 8-9% range for some of these players, the "undervalued" label starts to look very real.
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Semiconductors: Not All Are Created Equal
This is where people get really confused. The "AI trade" has been the engine of the 2025-2026 market, but many semi-stocks are terrifyingly exposed to Taiwan or China.
Intel (INTC) is the complicated child here. They’ve fallen behind TSMC in manufacturing, but they are the only Western company aggressively building out a domestic foundry business. With the CHIPS Act subsidies and the government’s desperate push for "silicon independence," Intel’s strategic value—their moat—is being rebuilt through sheer national necessity.
Is Intel "cheap"? By historical standards, yes. Is it risky? Absolutely.
But if you’re looking for a moat stock that could eventually benefit from tariffs (by being the domestic alternative to taxed imports), Intel is the controversial play that most "safe" investors are too scared to touch.
Spotting the "Hidden" Exposure
You've gotta be careful, though. Some companies look domestic but have "ghost" exposure.
A company might make everything in Ohio, but if their one specialized component comes from a factory in a tariff-targeted region, their entire production line can grind to a halt.
This is why Berkshire Hathaway (BRK.B) remains the gold standard for "moat" investing in a messy trade environment. Warren Buffett and Greg Abel have spent decades acquiring businesses with localized moats.
- BNSF Railway: You can’t move a railroad to another country.
- Berkshire Hathaway Energy: Utilities are the definition of a local, regulated moat.
- GEICO: Insurance is a service moat built on scale and brand.
Buying Berkshire is basically a bet on the internal U.S. economy. When the "world" is at war over trade, the internal American economy—movers, insurers, and power providers—remains a fortress.
Actionable Insights for Your Portfolio
So, how do you actually play this? You don't just go out and buy every "moat" stock you see.
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First, look for the Price/Fair Value ratio. Morningstar's "Wide Moat Focus Index" is a great place to start. In early 2026, many of these stocks are trading at a 20% to 30% discount to what they are actually worth.
Second, check the Supply Chain Origin. Use tools like Panjiva or ImportGenius (or even just deep-dive into the "Risk Factors" section of their 10-K) to see where their components come from. If "China" or "Imported materials" appears 50 times in their risks, the moat might have a leak.
Third, prioritize Intangible Moats. Software, data, and brands are "light" assets. They don't sit in shipping containers waiting for a customs agent to slap a fee on them.
Your Next Steps:
- Screen for Wide Moats: Use a stock screener to filter for companies with a "Wide" economic moat rating.
- Filter by Sector: Focus on Software, Utilities, and Domestic Industrials (like Defense).
- Check the "Tariff Sensitivity": Look at the percentage of Cost of Goods Sold (COGS) that is derived from imports. If it's under 10%, you're in the green zone.
- Evaluate Valuation: Only buy if the stock is trading at least 15% below its 5-year average P/E ratio or its calculated fair value.
The market is currently pricing in a worst-case scenario for anything with a "global" label. For the disciplined investor, that panic is exactly where the profit is hidden. You just have to know which moats are built on stone and which are built on sand.
Source References:
- Morningstar US Wide Moat Focus Index, 2026 Analysis.
- U.S. Department of Commerce: 2025-2026 Trade Impact Report.
- SEC Filings (10-K): Huntington Ingalls Industries, Tyler Technologies, Berkshire Hathaway.
- Allianz Global Investors: 2026 Market Outlook.