Tariffs Decimate Stock Indexes in Early Trading on April 3rd

Following the immediate market decline sparked by the recent tariff announcement, our confidence in the strength of a well-diversified portfolio—particularly one that includes alternative investments—has never been stronger.

The markets reacted swiftly and sharply to the recent announcement of sweeping new import tariffs by President Trump—including a 10% base tariff and steeper rates targeting specific nations—The S&P 500 dropped 3.3%, the Dow fell over 1,100 points, and tech-heavy Nasdaq lost 4.3%. Why such a dramatic reaction? Because tariffs, while politically strategic, introduce a heavy dose of uncertainty for investors.

Why Tariffs Rattle Markets

There are three key reasons tariffs tend to spook Wall Street. First, they increase costs for businesses that rely on imported goods, cutting into profits and potentially driving up prices for consumers. Second, they can ignite trade wars, leading to retaliatory tariffs that hurt American exports. Third, the increased costs and uncertainty can depress consumer spending and business investment—raising fears of a recession.

But There is an argument for Long-Term benefits

Tariffs aren’t all doom and gloom. Over time, they can protect domestic industries, bring back manufacturing jobs, reduce trade deficits, and encourage companies to rebuild supply chains closer to home. These moves could strengthen national security and create more resilient economic foundations. That, ultimately, may lead to a more self-sufficient U.S. economy.

In the Meantime: Volatility Is the Name of the Game

Markets hate uncertainty—and right now, there’s plenty of it. Fortunately, we anticipated turbulence. Over the past year, we were proactive in taking profits and repositioning a significant portion of portfolios into alternative, non-correlated assets. These include precious metals, agriculture, energy, currencies, and strategic trading funds—assets that often behave differently than traditional stocks and bonds. You’ve heard me say it, we invest in things that “zig” when the market “zags”. So far, these moves have paid off, offering cushion against stock market drawdowns.

Staying Grounded in a Shifting Landscape

As my first mentor used to say, “Never bet against American ingenuity or resiliency.” Market corrections are part of the journey. That’s why we maintain diversification, including alternatives, to help reduce downside volatility and provide stability. Whether you’re retired and drawing income, or younger and focused on growth, we’ve positioned portfolios with appropriate allocations in cash, bonds, and alternatives to navigate this environment.

What’s Next?

While current economic data remains solid, there are signs of weakness. The administration is tackling ballooning deficits and global trade imbalances head-on—moves that could temporarily weigh on GDP. With tariffs likely here to stay and inflation lingering, I believe there is an increased risk of recession in 2025.

My conclusion

We believe we’re well-positioned for whatever comes next—whether the markets rebound or face further storms. As always, thank you for the trust you’ve placed in me and my team. If you have any questions or want to discuss your portfolio in more detail, don’t hesitate to reach us at 518.406.5624.