As President Trump began his second term in January, many business leaders and investors expected a renewed focus on pro-growth policies—lower taxes, regulatory rollbacks, and aggressive deal-making. Instead, financial markets were met with significant volatility and uncertainty with the announcement of new tariffs.
In the administration’s first 100 days, markets have experienced sharp swings, including 33 days of losses and more than $6.5 trillion in market capitalization erased. The S&P 500 declined approximately 19%, peak to trough, since its February highs. While stocks have recovered most of the ground lost since the tariff announcement, the S&P 500 is still down roughly 7.3% since the inauguration, delivering the worst start for stocks since President Nixon’s second term in 1973.
Based on economic measures, the economy started the year on a solid footing, with unemployment low, inflation contained, and equity markets hitting record highs. One could argue that much of this strength is still in place. However, what has changed is the heightened uncertainty brought about by the tariff announcement on April 2nd.
Markets responded swiftly. The S&P 500 fell over 10% in just two trading sessions, a drop reminiscent of the early 2020 pandemic selloff and the 2008 financial crisis. Although stocks have since stabilized, the global financial system continues to digest the implications of this abrupt shift in trade policy.
Investor sentiment has also been shaken. Some market participants have begun to question the United States’ leadership in the global financial order and the reliability of U.S. assets as safe havens during times of stress.
While there are glimmers of optimism—such as signs the administration may walk back some of the steepest tariff proposals—uncertainty remains the dominant theme. Even pro-growth priorities like tax reform and deregulation are now overshadowed by unpredictability in trade policy direction.
Looking ahead, the next few weeks may be pivotal. So far, tariffs haven’t significantly impacted key economic indicators like inflation, GDP, or job growth—but upcoming data releases could change that. The Federal Reserve, for its part, may be forced into a holding pattern until greater clarity emerges.
Trade negotiations will remain in focus. Treasury Secretary Scott Bessent has suggested that an initial agreement with India could be imminent, providing a potential template for future deals. However, a broader accord with China—the most consequential—appears to be further off.
Our Outlook
While government policy always influences markets, rarely has policy uncertainty—particularly around trade—played such a central role in shaping the economic outlook. As a result, economic forecasting and business planning have become far more challenging.
Higher tariffs are likely to lead to higher consumer prices, at least in the short term. At the same time, many businesses may hesitate to invest amid the current fog of uncertainty. The result could be a period of slower economic growth paired with rising inflation—a scenario economists refer to as stagflation.
We continue to monitor these developments closely. While periods like this can be uncomfortable, they also serve as reminders of the importance of long-term perspective, diversification, and staying aligned with a disciplined investment plan.