Client Market Update: Tariff Turbulence Rattles Markets, But Long-Term Strategy Remains Key
After markets closed on April 1, President Trump announced a sweeping new tariff plan that exceeded investor expectations and sparked renewed volatility in global markets. The announcement triggered a sharp sell-off in equity futures as investors grappled with potential implications for economic growth, inflation, and financial stability. These new tariffs, enacted under the International Emergency Economic Powers Act of 1977 (IEEPA), aim to address the U.S. trade deficit—an issue the administration has labeled a national emergency.
The rollout includes a 10% blanket tariff on all countries, effective April 5, 2025, followed by a second phase of targeted, reciprocal tariffs on countries with the largest U.S. trade deficits, beginning April 9. Notably, some sectors and trade partners are exempt. Key exclusions include copper, pharmaceuticals, semiconductors, lumber, bullion, and essential minerals not sourced in the U.S. Additionally, goods from Canada and Mexico that comply with USMCA guidelines will remain tariff-free. While these carve-outs help mitigate some of the economic shock, markets remain on edge as the full scope and consequences of the tariffs are still unclear.
The true economic impact of tariffs is notoriously difficult to measure upfront. Exporting countries may absorb part of the cost or devalue their currencies to remain competitive. On the other hand, American consumers may face price increases, especially for goods with few substitutes. However, if domestic or alternative international producers can fill the gap, inflationary pressures may be moderated. Much depends on how trade partners respond, whether negotiations advance, and whether more exclusions are granted as the effects become clearer.
China Responds, Market Volatility Spikes*
Global tensions escalated further when China responded swiftly to the U.S. tariff plan with a 34% retaliatory tariff on a broad range of U.S. goods. This tit-for-tat move intensified investor fears and triggered another sharp sell-off, sending the S&P 500 down nearly 6% in a single day. Investors quickly sought safety in U.S. Treasuries, pushing the 10-year yield below 4%.
Still, there are signs that diplomacy remains possible. Both the U.S. and China set their reciprocal tariff dates—April 9 and April 10—just days apart, leaving a window for last-minute negotiations. China’s delayed implementation appears calculated: a move that shows strength domestically while allowing flexibility at the negotiation table. Likewise, the U.S. may be leveraging economic pressure to secure favorable trade terms. While the back-and-forth has rattled markets, it may ultimately be more about positioning than permanence.
Broader Economic Implications
It’s important to note that tariffs are not paid directly by countries. They are paid by importers, many of whom are American businesses. For example, a U.S. company manufacturing goods in China and importing them into the U.S. will now face higher costs, which may be passed on to consumers. Some companies may explore shifting production to other countries, but such transitions take time and investment. In the meantime, costs could weigh on corporate profits, consumer demand, and overall economic growth.
The Federal Reserve is watching closely, as this situation introduces a complex dynamic. On one hand, tariffs could raise import prices and lead to higher inflation. On the other, they could slow growth and suppress demand, especially if consumer confidence or corporate earnings falter. While some projections estimate that tariffs could raise annual U.S. customs revenues by $700 billion—about 2.3% of GDP—the economic impact depends largely on how those funds are used. If redistributed through tax relief or direct payments, growth could remain intact. But if applied solely to deficit reduction, a slowdown may follow.
What This Means for Investors
All of this leads to an important question: What should investors do?
The answer, more often than not, is to stay the course. Despite unsettling headlines, your financial plan is built to withstand volatility. Long-term investing requires discipline, and this situation is no different. Emotional decision-making in moments of uncertainty can do more harm than good.
That said, this is a good time to revisit your comfort with risk. If recent swings are affecting your peace of mind, it may be worth discussing whether your investment mix still reflects your long-term goals and emotional tolerance. Risk is personal, and aligning your portfolio with your comfort level can lead to more consistent, confident decisions over time.
Silver Linings: Opportunities in the Chaos
Despite the turbulence, there are reasons for optimism. First, equity valuations, especially in the tech-heavy growth sector, had become stretched. The recent pullback has brought valuations closer to historical averages, offering potential long-term buying opportunities. Additionally, the Federal Reserve has indicated it stands ready to cut interest rates if growth slows, which could soften the blow of tighter trade conditions.
Diversification is also proving its value. So far this year, international and value stocks have outperformed U.S. large-cap growth stocks. For investors with globally diversified portfolios, the benefits of balance are becoming evident.
Our Outlook
We anticipate continued volatility in the weeks ahead as negotiations unfold and additional details emerge. In this environment, it’s more important than ever to focus on what you can control. That starts with maintaining a well-diversified portfolio aligned with your long-term goals, managing risk thoughtfully, and relying on a trusted advisor to keep you grounded during periods of market stress.
The coming weeks are likely to bring more headlines, policy shifts, and market swings. While the urge to react is understandable, history consistently shows that the most successful investors remain patient and disciplined amid uncertainty.
Navigating the emotional ups and downs of investing is never easy, especially when markets are turbulent. But staying calm, focusing on your personal goals, and tuning out the noise can be among the most powerful choices you make.
How We Can Help
In times like these, personalized guidance matters more than ever. At Greenwood Hoff Wealth Management, we act as fiduciaries, always putting your best interests first. Our work goes beyond investment management. We anchor every decision in your comprehensive financial plan, helping you stay focused on your long-term goals, even when markets feel uncertain. Whether you’re evaluating risk, planning for a major life event, or simply need a sounding board, our team is here to support you. We proudly offer house calls for added convenience and are committed to meeting you where you are—both financially and personally. If you’re looking for a trusted partner to guide you through these unprecedented times, Greenwood Hoff Wealth Management is here to help.
Cetera Investors is a marketing name of Cetera Investment Services. Securities and Insurance products are offered through Cetera Investment Services LLC (doing insurance business in CA as CFG STC Insurance Agency LLC), and member FINRA/SIPC. Advisory services are offered through Cetera Investment Advisers, LLC. Office Address: 43 British American Blvd,1st Fl, Latham, NY 12110. Phone# (518)724-5004. The material contained in this document was derived from the articles written by Cetera Investment Management LLC on April 3rd,4th, & 10th of 2025, which can be located on our website: www.greenwoodhoff.com . Commentaries are published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Hello, please ensure the following disclosure language is added: The views stated in this letter are not necessarily the opinion of Cetera Investment Services LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards. Investors should consider their financial ability to continue to purchase through periods of low price levels. A diversified portfolio does not assure a profit or protect against loss in a declining market. S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.