It’s been quite a week, hasn’t it?
On Wednesday, President Trump announced a new wave of tariffs aimed at countries he believes are engaging in unfair trade practices. On Thursday the stock market responded with a sharp decline. For many investors, this feels all too familiar — a sudden move in Washington, a volatile day on Wall Street, and that uneasy feeling in the pit of your stomach while you wonder what’s next.
If you’re feeling nervous, let me offer both context and comfort.
What Just Happened?
Tariffs are, in essence, a tax on imported goods. When the U.S. imposes them, it raises the cost of foreign products, ideally nudging consumers toward domestic alternatives, and encouraging other countries to level the playing field by reducing the tariffs they impose on the United States.
President Trump’s latest move was sweeping — a broad-based tariff applied to a range of countries, including major trading partners like China, the European Union, Japan, and Vietnam.
Predictably, markets flinched – that was no surprise. The stock market dropped, Treasury yields fell, and gold — that old safe-haven asset — spiked.
But here’s the crucial point: this isn’t new territory!
History Doesn’t Repeat, But It Rhymes
We’ve been here before. During Trump’s first term, tariffs dominated headlines, sparking fears of trade wars and economic slowdowns. The market responded with occasional turbulence. Yet, during that period — from late 2017 through early 2020 — the S&P 500 rose by nearly 30%.
And no, that wasn’t because tariffs were harmless. They did introduce uncertainty. But markets are not allergic to bad news — they’re allergic to ambiguity. It’s the unknowns, not the headlines, that rattle investors the most.
Why the Market Reacted
Today’s reaction is primarily a function of uncertainty. Investors don’t yet know whether this tariff move is a serious long-term strategy or simply a tactical maneuver in what might become a new round of trade negotiations.
If the tariffs are temporary and aimed at getting concessions, they may not have a lasting economic impact. But if they persist, they could dampen corporate earnings, increase costs for consumers, and slow down parts of the global supply chain.
That said — the fundamentals of the U.S. economy remain intact. Inflation is sticky, but not spiraling. Job growth has moderated but not collapsed. And corporate balance sheets, broadly speaking, are stronger than they’ve been in years.
What Should You Do?
If you’ve been investing with a long-term strategy in mind — based on your personal goals, risk tolerance, and time horizon — then the best response to this news is usually no response at all.
That’s not a passive stance. It’s a wise and measured one.
Tariff policies might shift, markets might jitter, and headlines will come and go. But your plan — if it was built correctly — is designed to weather these moments. Think of it like a well-built ship in a squall. You don’t abandon it at the first wave; you trust its design and the direction it’s charted.
Moreover, market drops like ones we’ve experienced this week often present opportunities — not threats. When prices fall, long-term investors get to buy great businesses at a discount. That’s not a problem; that’s a gift.
Final Thought: Don’t Let the Noise Dictate Your Narrative
In my experience, the most successful investors aren’t the ones with the most complex strategies or the largest portfolios. They’re the ones who stay calm when others panic. They understand that while headlines can be dramatic, true wealth is built — and preserved — by sticking to a disciplined process.
This too shall pass. And more often than not, it passes far sooner than the headlines would have you believe.
Let’s stay the course.
Sincerely,
Richard Sturm
Managing Partner / Wealth Manager