Financial markets remain volatile following the April 2nd announcement of new trade tariffs, which will equate to at least 10% on all imports into the United States. These levies will represent the highest tariff rates in over a century and are sparking worries of a broader economic recession or a 1970’s style stagflation malaise. In addition, economists are anticipating retaliatory measures from key trading partners, such as China and the European Union, which will further exacerbate international tensions.
Companies most exposed to overseas manufacturing are seeing their share prices decline under initial selling pressure. In addition, economists have been quickly raising their inflation expectations on the heels of the tariff news, with some forecasts calling for prices to rise 4-5% over the next year. From the White House’s point of view, these trade policies (which mostly go into effect April 5th) will create new opportunities for American workers while addressing the large and persistent annual U.S. trade deficit which exceeded $1.2 trillion in 2024.
On a separate positive note, our office is diligently assembling first quarter client reports which will broadly reflect positive investment returns over the recently completed quarter (compared to a 4% drop in the S&P 500 benchmark). In the face of lower stock prices and increased market volatility, our long-standing emphasis on portfolio diversification, combined with our conservative approach to investing, have mitigated risk during this most recent bout of market uncertainty.
Of course, the most important task at hand is navigating what lies ahead for the markets and assessing the current economic and trade policies that are in a fluid state. We look forward to elaborating on these White House policy announcements as part of your 1st Quarter Report letter, while also commenting on other key market developments we believe are relevant to your investments and overall financial plan.
In the interim, if you have any questions or would like to speak with a member of our team directly, we welcome your call. We recognize these volatile chapters in the market can be unsettling, and we look forward to our continued work with you as we thoughtfully chart a successful path forward.
