One goal we always have is to keep you informed, offer perspective on what we’re seeing/thinking, and provide reassurance about the resilience of your portfolio as we move forward together. Below, I’ll outline the latest developments regarding tariff orders, including potential upsides and downsides of the policy, to give you a comprehensive view of the matter, as well as reasons to continue to focus on the future when it comes to your portfolio.
The International Emergency Economic Powers Act (IEEPA) and Tariffs: What Changed this Week
As of Wednesday, President Trump signed an executive order introducing a broad set of tariffs under the International Emergency Economic Powers Act (IEEPA), citing a national emergency over the US’s persistent trade deficit. Effective April 5, 2025, a baseline 10% tariff will apply to goods from all countries, with additional “reciprocal” tariffs starting April 9, 2025, targeting nations with large trade surpluses or high barriers to US exports—such as 34% extra on China, 20% on the European Union, and up to 46% on Vietnam. USMCA-compliant goods (United States-Mexico-Canada Agreement, which covers a large range of goods spanning from agriculture to dairy, poultry, and eggs to automotive parts) are exempt, though non-compliant goods face existing 25% fentanyl-related tariffs or a new 12% rate if those are lifted. The stated aim is to boost domestic manufacturing and address trade imbalances, but the markets had been reacting negatively to talk of tariffs for over a month now and are continuing to react with increased volatility over the past two trading days, especially given the breadth and depth of the tariffs themselves.
The Bigger Picture of Tariffs: Possible Market Impacts
Let’s consider various outcomes from the tariffs themselves and offer some opposing viewpoints on them.
On the optimistic side, tariffs could deliver some meaningful benefits. By making imported goods more expensive, they might encourage companies to shift production back to the US, potentially revitalizing domestic manufacturing. During Trump’s first term, steel tariffs led to job gains in that sector—thousands of jobs were added in metal industries, and some regions, like Minnesota’s iron ore hubs, saw economic boosts. If this policy succeeds, it could create jobs and strengthen industries like auto or construction. The tariffs are also projected to raise significant revenue which could fund tax cuts or infrastructure spending, potentially stimulating the economy.
On the flip side, there are risks that can’t be ignored. Tariffs increase the cost of imported goods, which could mean higher prices for everything from groceries to cars. Businesses reliant on global supply chains—like automakers using parts from multiple countries—might face higher costs, leading to layoffs or reduced profits, which could drag down stock prices in the short term. Retaliation is another very real concern; China, Canada, and Mexico have hinted at counter-tariffs, and if this escalates into a broader trade war, it could slow economic growth.
And to complicate things further, it’s unclear what President Trump’s playbook looks like from here. In other words, it’s unclear whether Trump’s use of tariffs is rooted in long-term economic policy or short-term political strategy. On one hand, he frames tariffs as a tool to protect American industries, reduce reliance on foreign supply chains, and bring jobs back home (especially in sectors critical to national security), which speaks to economic policy, but on the other hand, his unpredictable application of tariffs (sometimes introduced abruptly or used as leverage in unrelated negotiations) suggests a more tactical, transactional, political approach. This ambiguity raises questions about whether tariffs will ultimately be part of a cohesive economic vision or simply a flexible bargaining chip used to pressure trading partners.
The truth is nobody knows how this will play out—it’s a mix of promise and peril. The fact of the matter is that no one knows how this tariff story unfolds or ends. With so many variables at play, including geopolitical responses, supply chains, and consumer behavior, it is impossible to forecast outcomes with certainty. The broader objective behind these tariffs is to protect and revitalize key US industries, with a particular emphasis on restoring domestic manufacturing and blue-collar employment, especially in sectors deemed vital to national security. The strategy aims to reduce reliance on foreign supply chains, encourage investment in American production, and ultimately strengthen economic resilience. However, the major concerns are the potential unintended consequences. Tariffs often lead to higher input costs for US companies, which can translate into price increases for consumers. That raises the question: will these measures truly result in a meaningful resurgence of industrial jobs, or will the economic burden fall disproportionately on everyday Americans through inflationary pressures?
Why This Matters for Your Portfolio
Again, no one knows. How can President Trump know how Germany will respond to increased tariffs? How can any economist or sociologist or anthropologist predict how future generations of workers will interact with the labor market or how artificial intelligence and robotics will intersect with manufacturing and production here and around the world? Or how current and future generations of consumers will feel about the prices of goods and the value of labor? The global ripple effects are inherently unpredictable. The very people whose job it is to predict markets and economics can’t tell you what is going to happen next month or next year with any amount of consistent accuracy, let alone the most likely outcome of something with so many moving parts.
A best-case scenario might see US industries thrive, inflation stay manageable, and markets rally as business and consumer confidence grows. A worst-case outcome could involve spiraling costs, trade retaliation, and possibly even a recessionary pullback. Perhaps we’ll land somewhere in between, with adjustments, adaptation, and change along the way.
Staying Grounded Amid Uncertainty
Here are a few reminders for anyone who needs some help regaining perspective.
Declines are a natural part of the economic cycle and while the catalysts for such declines may never feel like they repeat and “this time [always] feels [and might in fact be] different,” the outcome has never been different: declines have, in time, recovered. After two very strong stock market years in 2023 and 2024, the volatility of late can feel unnerving, but viewing it through a historical lens is fruitful. According to Goldman Sachs, since 1950, the S&P 500 has seen 35 corrections (declines of 10% or more), averaging about one every 2 years. Again, the frequency of these events doesn’t make any one such event any easier to stomach, but perspective is important. In the 2010s alone, we had five—2011 (European debt crisis), 2015 (China yuan crisis), 2018 (rate hikes and trade wars), and two in 2020 (pandemic crash and recovery wobble). They averaged a ~13% decline and lasted about four months on average. This week’s decline so far fits the pattern—tariffs and sentiment seem to be this cycle’s trigger, but regardless of how long it lasts or the magnitude of the decline, history is a comforting guide because the market has always climbed back.
Over the long term, stock investors who simply stay the course historically have been rewarded for it, as the chart’s upward trajectory suggests. The appeal of market-timing is obvious—improving portfolio returns by avoiding periods of poor performance. However, timing the market consistently is nearly impossible. And unsuccessful market-timing (the more likely result) of both getting out and getting back in can really hurt a portfolio. J.P. Morgan’s data nails it: Had someone invested $10,000 in the S&P 500 on Jan. 1, 2002, they would have a balance of $61,685 if they stayed invested through Dec. 31, 2021. Miss the 10 best days—often right after the worst—and it’s $28,260 (J.P. Morgan Asset Management). Zoom out further: despite crashes, wars, and recessions, the S&P has averaged 9-10% annual returns over decades (Morningstar, March 2025).
Time smooths the bumps.
Investor Bill Miller echoes this point, “In the post-war period the U.S. stock market has gone up in around 70% of the years…Odds much less favorable than that have made casino owners very rich, yet most investors try to guess the 30% of the time stocks decline, or even worse spend time trying to surf, to no avail, the quarterly up and down waves in the market…We believe time, not timing, is the key to building wealth in the stock market.” Timing the market through this is impossible—history shows the best days often follow the worst, and staying invested has typically outpaced trying to dodge the turbulence.
So, What Can You Do?
Do your best not to let your emotions or political persuasion drive your behavior as a long-term investor, do your best to remember your tolerance for risk, and do your best to remember why you’re invested in the stock market to begin with (to compound your assets over the long-term). The stock market is a risky place and certainly not a place for the faint of heart. The bond market or a bank account is a better place for those who can’t withstand (either emotionally or financially) the ups and downs that come with the territory of being a stock investor. Remember—your portfolio’s bond allocation gives you a buffer against stock dips, while its stock exposure keeps you in the game for long-term appreciation, and diversification remains a fundamental risk management tool. Overexposure to any single asset, sector, or company, AKA, keeping all your eggs in one basket, increases risk, and this is not the environment for outsized bets. There is no such thing as being a stock investor who always wins, and diversification and asset allocation is a great hedge against that.
We’re Here for You
And lastly, do your best to rely on us as trusted advisors to you and as professional money managers. If the current environment has you rethinking your approach—whether it’s adjusting allocations, exploring income options, or just talking it through—we are here to work with you to find the right path.
Despite the angst, uncertainty, fear, we remain hopeful—your portfolio is designed for resilience, and markets have a way of finding their footing over time. While your diversified portfolio is built to weather this, the uncertainty could mean bumpier markets ahead. Thank you for your continued trust in us as we navigate this dynamic period in the markets.
Disclosures: Howe & Rusling is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training. This communication is for informational purposes only and should not be considered investment, legal, or tax advice. It is not a recommendation to buy or sell any security or adopt any investment strategy. All investments involve risk, including the possible loss of principal. Any opinions or views expressed are those of the author as of the date of publication and are subject to change without notice. This commentary contains forward-looking statements, which are inherently speculative and involve known and unknown risks and uncertainties. Actual outcomes and results may differ materially from what is expressed or implied in such statements. The information herein has been obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness. Third-party trademarks and data cited remain the property of their respective owners and are used for illustrative purposes only. Historical data such as market returns and economic events are provided for context and do not guarantee future results. Past performance is not indicative of future performance. Diversification and asset allocation do not ensure a profit or protect against loss in declining markets. This material reflects the current opinion of the author and is not intended as a forecast or guarantee of future results. No assurance can be given that any forecast or targeted result will be achieved. Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal. A long-term investment approach cannot guarantee a profit.
