March Monthly

Traditions Wealth Advisors
Greysen Golgert/Brien L. Smith CFP©
Economic Analyst Intern/Chief Investment Officer
3/28/2025

President Trump has been insistent that reciprocal tariffs are on the way, but their reported scope and scale changes every week. Dramatic rhetoric and calls for extreme taxes on various imports have been swallowed hook, line, and sinker by investors. When the implications of a potential trade war with the EU became clear in early March, stock markets entered what Wall Street calls a “correction” (the S&P 500 had fallen over 10% by that point) by March 13th . That knee-jerk reaction to President Trump’s spat with the EU was likely overblown, but it makes sense that high-stakes geopolitical machinations are spooking investors. Stagflation—low growth with high inflation—is the top-of-mind concern for financial institutions at the moment. Stagflation might become a real threat if every tariff proposed by President Trump were to actually make it out of the Oval Office, but that has not been the case. The only tariffs Trump has effectuated are a 20% tariff on all Chinese goods, a 25% tariff on non-USMCA-compliant products from Canada and Mexico, and a 25% tax on all steel and aluminum imports. Those are not insignificant figures by any means, but they are certainly less severe than President Trump had initially promised and mostly represent a continuation of his approach to trade policy in his first term.

​April 2nd is purportedly the day when a new, comprehensive tariff plan will be revealed by the Trump Administration. Markets made up some of their losses from weeks prior when reports came out that this plan will cover a narrower scope than previously expected. They will focus primarily on the “dirty 15”—the 15% of nations with persistent trade imbalances with the U.S.—instead of on the entire breadth of U.S. trade relationships as the president had initially directed them to do. Despite the slight let off, industry leaders are still seeking clarity when it comes to sectoral tariffs such as those placed on steel and aluminum. These can have a more disruptive effect than country-specific tariffs because companies based in the U.S. that rely on cheaper foreign steel (or aluminum) for production will be forced to eat the additional 25% cost that importers now face. What April 2nd has in store for investors remains to be seen, but it is worth remembering that Trump can change executive orders in an instant. Members of that “dirty 15” may elect to remove their current tariffs on U.S. goods in order to appease President Trump and get themselves removed from the reciprocal tariffs list. The only
certainty regarding this tariff plan is that it will heavily whipsaw financial markets, either generating a rally or opening up the possibility for another “correction.”

These trade policy swings have created choppier waters going forward, but there is reason to trust in the resilience of this United States economy. Sentiment may be declining because of the geopolitical element, but hard economic data reveals a fundamentally strong economy. Unemployment is still extremely low at 4.1%, retail sales are up 4.2% as of the year ended January 2025, and inflation surprised to the downside in February
(2.8% year-over-year). These figures give the Federal Reserve plenty of room to maneuver with rate cuts if the contractionary effect of tariffs proves significant.

As always contact us at Traditions Wealth Advisors with any questions or concerns.

Sources:
https://www.wsj.com/politics/policy/trump-tariff-reciprocal-deadline-industrial-delay-97508838?mod
https://www.yardeniquicktakes.com/us-economy-is-still-resilient-but-tariffs-pose-risks/
https://www.stifel.com/Newsletters/AdGraphics/InSight/Sightlines/2025/SL031325.pdf