Traders work on the floor of the New York Stock Exchange (NYSE) in New York.

Small-cap stocks could outperform their large-cap counterparts the rest of this year if President Donald Trump increases his protectionist stance on trade and other matters.

They also have further potential upside relative to large stocks from the lower corporate tax rate.

The Russell 2000 — which is made up of small-cap stocks — is up nearly 5 percent through Wednesday's close after Trump announced he wanted to implement tariffs on steel and aluminum imports. Meanwhile, the large-cap index is up just 1.3 percent in that time.

The tariffs and possible retaliation from countries such as China put at risk large-cap companies that do lots of business overseas. Small-cap companies, meanwhile, are less exposed to a trade war, given most of their business is domestic.

"The protectionist agenda will be better for small-caps relative to large-caps," said Dan Miller, director of equities at GW&K Investment Management. "I would recommend investors buy into small-caps. It's a good time to get into those names."

Trump made the tariffs announcement on March 1 and a week later signed two proclamations levying a 25 percent charge on steel imports and a 10 percent tariff on aluminum imports. Mexico and Canada — two key U.S. trading partners — were exempt from the tariffs.

Reuters also reported Tuesday that Trump may impose tariffs on $60 billion of Chinese goods. Investors worry that other countries could retaliate by implementing their own tariffs on U.S.-made goods and sparking a trade war.

"Small-caps have a much smaller revenue coming from overseas, so they are much less affected by tariffs than the multinationals," said Sean O'Hara, president of Pacer ETFs.