What New Tariff Announcements Mean for Your Investments

By Matt Held, CFP®

The S&P 500 recently experienced a three-day rally early last week as investors anticipated that the new tariffs announced by the U.S. government would be limited and targeted. However, the official announcement on Wednesday far exceeded expectations, with President Trump imposing a 10 percent tariff on imports from all countries except Canada and Mexico. Additionally, higher tariffs were proposed for nations with ongoing trade disputes, including China (34 percent), Japan (24 percent), and the European Union (20 percent).

Potential Economic Impact

If fully implemented, these tariffs could significantly impact the broader economy. Higher tariffs generally lead to increased costs for imported goods, which can drive up consumer prices and contribute to inflation. This situation may also dampen consumer confidence as individuals become wary of the economic outlook.

It’s worth noting that the announcement allows for negotiation, as President Trump indicated that other countries could lower their tariffs on U.S. goods to mitigate the proposed tariffs.

As the situation evolves, uncertainty and market volatility are likely to persist. This uncertainty affects consumer spending, corporate investment decisions, and investor strategies. The administration believes that tariffs could generate revenue to support tax cuts and reduce the deficit, potentially benefiting the economy in the long run. However, the ultimate effectiveness of these measures remains very unclear.

A Refresher on Market Selloffs

They aren’t comfortable, can be frightening, and they hurt…but they happen more than we likely remember. This chart shows the max S&P 500 drawdown in each year going back to 1988. The (19%) right before 2020 you see is 2018, the last time tariffs were in the news (this round of tariffs is admittedly much broader than 2018). The key point is that in most of these years, the market still ended positive for the year.

While tempting to make quick decisions in times of stress, it is usually not a good idea to make major investment decisions without taking a step back and thinking it all the way through. The chart on the next page shows that most of the time, the market’s best days are near its worst days (if you notice that the green “best day” dots are very close to the red “worst day” dots). In other words, if you try to avoid the worst days, you will likely miss the best days also…and those best days are very important to long-term returns.

Staying Focused (and Diversified)

Over the next several days, we’ll be watching to see how other countries respond. Some may choose to negotiate, while others may go in the other direction and retaliate with tariffs of their own. If that happens, it could escalate tensions further, which could continue to weigh on investors.

Coming into the year, we expected increased market volatility due to potential policy proposals. We anticipate that it will continue. In situations like this, investors’ immediate reaction is to sell first and ask questions later. Keep in mind that volatility, though uncomfortable, can be a time for long-term investors to look for opportunities.

In the meantime, let’s finish with the importance of diversification, especially after it’s faced skepticism over the past few years. Through April 3rd, you’ll see in the “YTD” column several asset classes that were still positive for the year.

Final Thoughts

While new tariffs have added uncertainty to the markets, history shows that short-term volatility often gives way to long-term growth. Reacting emotionally can lead to missed opportunities—especially since the market’s best days often come right after its worst. That’s why staying diversified and focused on your long-term strategy is key.

The Clarity Wealth Management team guides clients through every financial stage—from your first stock option award to planning your next chapter. As a local, advisor-owned firm backed by the national resources of Commonwealth Financial Network, we combine deep experience with strategic, analytical planning tailored to executives and professionals. We’ve helped clients navigate times like these before—and we’re here to help you do the same.

Ready to talk? Schedule a no-obligation, icebreaker call at claritywealth.org, call (513) 278-9420, or email Info@ClarityWealth.org.

About Matt

Matt Held, CFP®, is the lead advisor and a founding partner of Clarity Wealth Management, a boutique firm based in Cincinnati, OH. Since entering the industry in 2006, Matt has helped corporate executives, professionals, and business owners uncover opportunities and build long-term financial strategies. Driven by a desire to control his own future and create a lasting brand, Matt co-founded Clarity Wealth Management in 2012. His mission was to build a firm that would provide truly personalized guidance—and become a legacy for his own family. Today, Clarity serves about 100 households and focuses on helping clients simplify and navigate complex financial decisions, particularly those involving equity compensation, tax planning, and executive retirement.

Matt’s approach is rooted in trust, loyalty, and hard work. As a CERTIFIED FINANCIAL PLANNER® professional, he is deeply committed to long-term relationships and believes that clarity doesn’t mean predicting the future, but having the confidence that your plan can handle whatever comes your way.

Outside of work, Matt enjoys time with his wife, Abby, and their twins, Henry and Kinsley. Whether it’s watching sports (they love their Ohio State Buckeyes), hitting the slopes out West, or squeezing in a CrossFit workout, he’s passionate about staying active and present. He also serves on the Rising Professionals Network at DePaul Cristo Rey Catholic High School and is a proud graduate of Moeller High School and The Ohio State University. Matt holds Series 7 and 66 licenses, is licensed for health insurance, and earned his CFP® certification in 2012. He has been named a Five Star Wealth Manager in the Cincinnati area each year since 2013.* To learn more about Matt, connect with him on LinkedIn.

*2013-2023 Five Star Wealth Manager Award, created by Five Star Professional. The 2023 award was presented in September 2023 based on data gathered within 12 months preceding the issue date. 1,649 advisors were considered, 240 advisors were recognized. Advisors pay a fee to hold out marketing materials. Not indicative of advisor’s future performance. Your experience may vary. For more information, please visit www.fivestarprofessional.com.

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Bonds are subject to availability and market conditions; some have call features that may affect income. Bond prices and yields are inversely related: when the price goes up, the yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity.

Diversification does not assure a profit or protect against loss in declining markets, and diversification cannot guarantee that any objective or goal will be achieved.

Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network.

Authored with Chris Fasciano, chief market strategist at Commonwealth Financial Network®.