Here are the winners and losers of the trade war

Tariff deadline day has arrived. The administration celebrated Thursday night by publishing a list of about 70 countries and their respective tariff rates, which are set take effect next Thursday.Why it matters: As stocks continue hitting record highs, beneath the surface, tariff policy is reshaping market winners and losers. Investors looking to beat the index are racing to determine where the pain and opportunity will hit.What they're saying: "I think there's a disconnect between the superlative performance of the US equity market and the mediocrity of the American economy," says David Kelly, chief global strategist at JPMorgan, who thinks tariff-driven inflation has yet to fully hit consumers.He argues investors should go sector by sector and company by company to determine which firms are vulnerable to margin squeezes versus those that could thrive under the new trade regime.Zoom in: Based on several Axios Markets interviews, here are the winners and losers of the trade war.Winners: Financials, Big Tech, utilities, communications.Losers: Consumer staples, energy, real estate, health care.Mixed: Consumer discretionary, industrials, materials.Between the lines: The winners are driven by the outperformance of AI and wealthier consumers holding up consumer spending. The underperformers could be determined by weakness among lower-income consumers and the sector-specific tariff effects.Case in point: Consumer discretionary is split. Luxury brands and travel companies are holding up, while discount retailers could struggle to pass higher costs on to stretched customers.As Big Tech firms feel pressure to have an AI strategy and are expanding their capital expenditures to that end, their rally could still have legs.Zoom out: Investors would be smart to zoom out and look at "valuations of the different asset classes and different broad sectors in their portfolio and just ask themselves, does this make sense," Kelly says.At some point, you will see a "significant correction," he adds, likely from sectors with overextended valuations, which in this case is Big Tech.Be smart: Investors should also look at the administration's U-turn on copper tariffs as a market case study.Copper investors priced in worse levies than what they ended up getting. The market "mispriced tariffs on raw copper," says Rob Haworth, senior investment strategy director at U.S. Bank Asset Management Group.The final tariffs announced were less "onerous" than initially expected, triggering a record plunge in copper prices.Going forward, investors hope understanding the administration's end goals with the tariffs will yield more clarity."What are we really trying to secure here?" Haworth asks.The bottom line: The market may be rallying, but trade policy drives sector-specific price action. That could determine market leadership for the year.

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