What do tariffs mean for your portfolio?

What Recent Tariffs Could Mean for the Market and Investors

April 2, 2025 Update

This week, President Trump announced a significant move in U.S. trade policy, introducing new tariffs aimed at addressing what he perceives as trade imbalances between the U.S. and the rest of the world. These tariffs could have broad implications for the market, investors, and the U.S. economy. Here’s a breakdown of what the current tariff situation means, especially for those investing in today’s unpredictable environment.

The Uncertainty Factor

The most pressing concern for markets right now is uncertainty. The recent tariffs—imposed on countries with large trade deficits with the U.S.—are not just about the immediate cost but about the lack of clarity around their long-term purpose. Are these tariffs a starting point for future negotiations, or are they meant to stay in place for the foreseeable future?

This uncertainty is a significant risk. While the tariffs themselves might not drastically impact the U.S. economy, the ongoing unpredictability could lead to slower economic activity and potentially increase the chances of a recession down the road. As markets adjust to this uncertainty, market volatility is likely to remain elevated.

Key Takeaways for Investors

1. Uncertainty Is the Biggest Risk: The true impact of these tariffs is still unclear. Will they be short-term or long-term? Who will ultimately bear the cost—corporations, consumers, or exporters? This is a bigger risk than the tariffs themselves.
2. Possible Economic Slowdown: Though a recession isn’t certain, the uncertainty around tariffs and their effects on trade could slow down economic growth. As expenses rise and profits fall, earnings growth is challenged. This makes the market more volatile.
3. Staying Resilient in a Volatile Market: As tariffs continue to dominate news, investors should consider more neutral investment positions instead of taking on too much risk. For those close to retirement or in retirement, making sure they have appropriate guardrails and protection is paramount. Market volatility presents both investment and tax opportunities.

The Impact of Tariffs

The tariffs are more aggressive than expected, marking the largest escalation of U.S. tariffs since World War II. These rapid tariff increases could impact supply chains, raising inflation risks while slowing economic growth.

Looking Forward

With markets reacting negatively to these tariffs, including falling stock prices and rising gold prices, it’s clear that the financial landscape is shifting. With volatility expected to continue throughout 2025, making sure you have a strategy built around your needs and the current economic conditions is critical.