Materials Sector Set to Soar: U.S. Tariffs Fuel ~20% Earnings Surge by 2026

Wall Street's next cash cow isn't tech—it's the industrial backbone. Forget software; hardware's about to print money.

Tariffs as a Tailwind

Washington's trade walls aren't just political theater—they're a direct injection of pricing power. Import barriers let domestic producers name their price, and customers have little choice but to pay up. It's a classic margin expansion story, but with a government-backed guarantee.

The 2026 Payoff

The math is brutally simple. Analysts project the sector's earnings to climb roughly 20% in 2026. That's not growth; it's a windfall, fueled by policy, not productivity. It turns out the quickest path to profit isn't innovation—it's a protectionist pen stroke.

A cynical observer might note this is how you 'create value' in modern finance: not by building a better product, but by lobbying for a more favorable rulebook. The materials sector just found its catalyst, and it's sitting in a filing cabinet in Washington.

Steelmakers prepare for backlog boost as tariffs drive prices

Richard Bourke from Bloomberg Intelligence said tariffs on imported steel are giving U.S. producers more control over pricing.

“U.S. mills should continue to displace imports as long as 50% Section 232 tariffs remain in place,” he wrote. These are the same Trump-era levies still shaping trade today.

Nucor, which Bourke called the U.S. mill with the widest product range and some extra capacity, reported a strong order book for 2026. It pointed to projects in energy, infrastructure, data centers, and manufacturing as key drivers.

In a December update, the company said existing policy should lead to “continued gradual improvement in business conditions.”

Steel Dynamics also flagged a larger backlog.

The company expects lower interest rates to help push up infrastructure spending and bring more production back to the U.S. Bourke explained that many of the orders in play are lag contracts, meaning the money won’t show up until next year.

The packaging sector isn’t having the same smooth ride. Tariffs here are more of a burden, but some companies are getting help from their clients. General Mills and PepsiCo have been promoting products more aggressively, which means higher volume. Truist’s Michael Roxland said this trend has boosted Amcor and similar suppliers.

Jefferies analysts believe easier year-over-year comparisons and a slow return of consumer confidence could help the sector in the second half of the year.

But right now, it’s tight. RBC’s Matthew McKellar said mills in North America are already NEAR full capacity, which could support a price hike.

Packaging, chemicals, and construction firms shift strategy for growth

Packaging companies are reacting with internal changes. Amcor CEO Peter Konieczny said the company plans to meet its 2026 targets using synergies, not economic improvement. The company sees adjusted profit growth of 12% to 17%, its best in five years.

Still, the overall picture in packaging is messy. Growth from food producers hasn’t extended to other customers, so firms are turning to cost cuts and plant closures to manage softer demand and economic drag. International Paper, which had four years of declining profits, now expects a turnaround.

But the company isn’t upbeat. Executives told an industry event in December that demand is still weak. They blamed inflation, trade pressure, and the sluggish housing market.

“In North America, we still feel very tight from a supply-demand perspective,” said CFO Lance Loeffler. “All we need is a little bit of spark on the demand side, and I think it would be really good for business.”

Outside packaging and metals, the remaining materials sub-sectors are hoping for a rate-cut lifeline. Chemicals are forecast to finally grow after three rough years. The same goes for construction materials, which dropped in 2025 but are set to rebound.

Sherwin-Williams is ready to benefit if home sales pick up, said Citigroup’s Patrick Cunningham. Albemarle is also expected to gain ground thanks to higher lithium prices from rising demand in energy storage.

For construction stocks, like CRH, falling interest rates could lower borrowing costs and push more projects forward. BI analyst Sonia Baldeira said this could help unlock residential and commercial construction deals stuck in limbo.

Every piece of this puzzle points to a rare winning streak for the materials sector, one fueled by tariffs, backlogs, tighter supply, and cost cuts.

Get seen where it counts. Advertise in Cryptopolitan Research and reach crypto’s sharpest investors and builders.