Stock markets have experienced a significant downturn following the recent tariff announcements. Here's an overview of the performance of the S&P 500: 

Yesterday's Performance (April 3, 2025): 

  • S&P 500: Fell 4.8%  

Today's Performance (April 4, 2025 as of 12:50 PM CST): 

  • S&P 500: Down 4.9 % 

Market turbulence understandably raises concerns, so here's a market update and a reminder of why we stay focused on long-term goals. While history is not destiny, history has consistently shown that investors who exit markets or reduce risk during periods of heightened volatility like these often regret those decisions within a year or two. Patience and perspective remain critical allies in navigating uncertainty. 

Synopsis of Tariff Situation 

On April 2, 2025, President Trump announced a new structure of trade tariffs. These measures represent a significant escalation in protectionist trade policy, with potentially far-reaching consequences. The policy includes two main components: 

  • Baseline Tariff: A 10% tariff on all U.S. imports, effective April 5, 2025. 
  • Reciprocal Tariffs: Higher, country-specific tariffs on approximately 60-80 nations, ranging from 10% to 54%, effective April 9, 2025. These are targeted at countries with significant trade deficits or non-reciprocal trade practices with the U.S. 

Certain goods are exempt, including steel, aluminum, and autos (already under Section 232 tariffs), USMCA-compliant goods from Canada and Mexico, bullion, energy, minerals not available in the U.S., pharmaceuticals, semiconductors, copper, and lumber. 

Breakdown of the tariffs by country: 

  • China: A total tariff of 54% (34% reciprocal + 20% existing) 
  • European Union (EU): 20% reciprocal tariff 
  • Mexico: 25% tariff on non-USMCA goods; USMCA-compliant goods exempt 
  • Canada: 25% on non-USMCA goods + 10% on energy imports 
  • Vietnam: 46% reciprocal tariff 
  • Japan: 24% reciprocal tariff 
  • South Korea: 25% reciprocal tariff 
  • India: 26% reciprocal tariff 
  • Taiwan: 32% reciprocal tariff 
  • Thailand: 36% reciprocal tariff 
  • Cambodia: 49% reciprocal tariff 
  • United Kingdom: 10% baseline tariff 
  • Other Countries: 10% baseline tariff 

These tariffs are projected to have significant economic repercussions, including: 

1. Gross Domestic Product (GDP) Growth Reductions 

  • Budget Lab (Yale University): Projects a 0.5% reduction in 2025 real GDP growth from the April 2 tariffs alone, worsening to -0.9% under all 2025 tariffs. Long-term GDP is estimated to be 0.4–0.6% smaller annually. 
  • S&P Global Ratings: Aligns with these trends, forecasting 1.9% annual GDP growth in 2025 (down from 2.8% in 2024) and a 0.4% reduction in fourth-quarter-over-fourth-quarter growth due to tariffs and policy uncertainty. 

2. Consumer Price Increases 

  • Budget Lab: Estimates short-run price increases of 1.3% (April tariffs) and 2.3% (all 2025 tariffs), translating to $2,100 and $3,800 average household losses, respectively. Lower-income households face disproportionate impacts ($980–$1,700 annually). 
  • Sector-Specific Effects: Apparel prices could rise 17%, while electronics, automobiles, and food face above-average increases. 
  • S&P Global: Anticipates 2025 inflation near 3.0%, driven by tariffs and supply-chain disruptions. 

3. Trade War Risks 

  • Control Risks: Identifies a heightened risk of global trade conflicts in 2025, driven by U.S.-China tensions and retaliatory measures. The EU and third countries may face collateral damage from escalating restrictions. 

These estimates suggest stagflationary pressures—slower growth coupled with higher prices—and highlight geopolitical and sector-specific vulnerabilities. 

The Importance of Staying the Course 

Historically, the stock market has experienced numerous periods of decline, often driven by unforeseen events, including: 

  • Wars and military conflicts (e.g., the 2022 Russian invasion of Ukraine) 
  • Financial crises (e.g., the 2008 Global Financial Crisis, the 1907 Knickerbocker Trust collapse) 
  • Pandemics (e.g., COVID-19's 30% equity plunge in 2020, the 1918 Flu Pandemic) 
  • Geopolitical shocks (e.g., the 1973 OPEC oil embargo, Brexit) 
  • Terrorist attacks (e.g., 9/11's 14% S&P 500 drop) 
  • Black Monday's 1987 program-trading crash (22.6% single-day decline) 
  • Political instability and currency crises (e.g., the 1997 Asian Financial Crisis) 
  • Natural disasters 

Recovery periods average about two years but can range widely, from months (post-2020) to years. 

Here's why it's important to stay the course: 

  • Long-Term Growth: The stock market has historically delivered strong long-term returns. Trying to time the market by buying and selling in response to short-term fluctuations can lead to missing out on significant gains. 
  • Diversification: A well-diversified portfolio, aligned with your long-term financial goals, is designed to weather market volatility. 
  • Emotional Decision-Making: Reacting emotionally to market downturns can lead to poor investment decisions. It's essential to stick to your investment plan and avoid making impulsive changes. 
  • The Danger of Market Timing: Attempting to time the market is notoriously difficult, even for seasoned professionals. Studies have shown that missing just a few of the market's best days can significantly reduce long-term returns. 

Our Commitment to You 

We are committed to helping you navigate these challenging times. We will continue to: 

  • Monitor the situation closely: We are closely monitoring market developments and assessing the potential impact of the tariffs on your investments. 
  • Provide you with timely updates: We will keep you informed of any significant changes and provide you with our analysis of the situation. 
  • Maintain your long-term investment strategy: We will work with you to ensure that your investment strategy remains aligned with your long-term financial goals. 

We understand that you may have concerns, and we encourage you to reach out to us with any questions. We are here to help you make informed decisions and stay focused on your long-term financial success. 

Date: 04/04/2025, 1:00 PM CST