According to a recent client note from BlackRock, there’s a tug-of-war happening in the U.S. economy. On one hand, tariffs are putting pressure on growth. But on the other hand, artificial intelligence (AI) is giving a strong boost to company profits.
So far, the benefits of AI are winning. BlackRock says that U.S. manufacturers are among the hardest hit by tariffs. Despite this, the industrials sector — which includes many manufacturers — has been the top performer in the S&P 500 this year.
Industrials have gone up about 15%, while the overall S&P 500 index has risen only 6%. The strong performance is partly because AI is helping these companies improve efficiency and profits.
BlackRock also points out that other big changes, like global tensions and higher defense spending, are pushing the sector forward. These trends are creating new opportunities that benefit industrial companies.
In short, even though tariffs are a challenge, AI and other global forces are giving U.S. industries a solid lift in 2025.
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