Following a two-year period of relative stability and market gains, recent changes in tariff policy have stirred up uncertainty in the markets. The initial reaction has been negative, understandably fraying more than a few nerves. While it might be tempting to panic a little, it’s essential to take a step back, assess the situation rationally, and review all of the facts objectively.
The latest round of tariffs, targeting a wide range of imports—including key sectors like technology, consumer goods, and industrial materials—has raised concerns about inflationary pressures and supply chain disruptions. While some of these tariffs are an extension of previous trade policies, the broader scope suggests a more aggressive stance on trade negotiations. It remains to be seen whether these measures will serve primarily as bargaining tools or become long-term policy shifts. If the latter, the potential impact on corporate earnings and economic growth will need close monitoring. However, if fears prove exaggerated and trade partners respond with measured adjustments rather than full-scale retaliation, markets could see a "better-than-expected" positive surprise.
The current economic picture remains mixed. The bad news: consumer sentiment has softened, and GDP growth is expected to slow in the first quarter, indicating some economic headwinds. The good news: inflation remains in check at 2.8%, with no signs of a sharp spike despite the tariff announcements. As always, short-term market volatility is inevitable, and making investment decisions based on knee-jerk reactions to policy changes can be risky. While some sectors may experience short-term pressures, the broader economic trend of resilience and growth remains intact. Staying disciplined, understanding sector-specific risks, and maintaining a well-diversified portfolio will be critical during this period of transition.
To help reinforce this long-term perspective, we’ve included this article which highlights how markets have often bounced back from intra-year downturns to end the year with positive returns.
As always, we’re here to answer any questions or discuss any concerns you may have.
Sincerely,
Jordan Bromley