So far this year, capital markets have reacted strongly to news about potential trade wars and tariff policies.
In April, the S&P 500 experienced one of the worst three-day periods on record following President Trump’s “Liberation Day,” when his new tariff policies were announced to the world. The proposed policies came as a shock to capital markets, which responded accordingly. Similarly, in May, the initial steps of a trade deal between the United States and China were announced, reducing the effective tariff rate for both countries. When markets opened the following Monday, equity markets reacted positively.
While equity markets tend to respond almost immediately to tariff-related news, the real implications of these policies take much longer for the economy to absorb. A similar trend was observed in 2022 when the Federal Reserve began raising interest rates. The stock market reacted to the news by falling double digits over the course of the year. Even though interest rates increased by only 0.25% in some instances, markets responded immediately, and investors adjusted their portfolios based on perceived implications.
At Schneider Downs Wealth Management Advisors, we believe that the longer-term impact of tariffs on the real economy will resemble that of rising interest rates in 2022 — it will take time. Although the effects on economic growth, inflation, and other factors may differ this time, we will have to wait and see how everything unfolds.
About Schneider Downs Wealth Management
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Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services. Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice. Registration with the SEC does not imply any level of skill or training.
