Goldman’s playbook on how to invest around a global trade war

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A worker loads an aluminum coil onto a loading dock at the Arconic manufacturing facility in Alcoa, Tennessee.

President Donald Trump’s plan to slap tariffs on foreign aluminum and steel is sparking a big sell-off in the stock market. Investors are concerned the tariffs may start a global trade war.

The Dow Jones industrial average traded nearly 360 points lower after Trump said on Thursday the U.S. will impose tariffs of 25 percent for steel and 10 percent for aluminum as early as next week.

Goldman Sachs gave its clients a specific game-plan last year to play this big moment for the markets.

The firm warned its clients then that if Trump does implement a protectionist trade policy, it could start a global trade war and lead to a market drop.

“One potential risk to our central case is that global growth slows, or profits are hit, by increased US tariffs on trade and the possibility of an escalating global trade war,” Goldman’s chief global equity strategist Peter Oppenheimer wrote in a note to clients in July of 2017.

In the event of the conflict, the Oppenheimer recommended investors buy companies with higher domestic sales exposure.

“Below the surface of the market, trade conflict would benefit the performance of the most domestic-facing U.S. stocks relative to the most foreign-facing firms,” he wrote.

Here are seven companies in Goldman’s domestic sales basket that the strategist recommended.

Four out of the seven stocks in the basket above are rallying Thursday. CSX is the biggest gainer out of the names trading up 1.6 percent.

Note: Goldman’s domestic sales basket list is as of Jan. 2017