Weekly Buzz:🥊Tariffs, trade wars, and your portfolio

5 minute read

Trump is rolling out tariffs with all the determination of someone rearranging furniture, even if not everyone agrees with the new layout. The day after the US confirmed tariffs on its own neighbours, Canada and Mexico, the S&P 500 fell 1.76% – its worst day since December. But there might be relief coming, with US Commerce Secretary Lutnick suggesting that there may be some rollback.

All that tariff talk

1. The US has imposed 25% tariffs on imports from Canada and Mexico, affecting over USD 900 billion in annual trade. Canada’s countermove came in as tariffs on USD 20.8 billion (CAD 30 billion) worth of American goods, with another USD 86.8 billion (CAD 125 billion) to follow in three weeks. That was soon followed by hints of a compromise from US Commerce Secretary Lutnick.
2. Europe is next in line. The US will be imposing 25% duties on European imports starting April, with German automakers squarely in the crosshairs. Europe has pledged to respond with its own tariffs on American products if these measures take effect.
3. Across the Pacific, Trump is doubling existing tariffs on Chinese goods to 20% – timing the announcement with China's biggest political meeting of the year. Beijing responded with 10–15% tariffs only targeting US agricultural products – a signal that it prefers de-escalation. 

What’s the takeaway here?

The back-and-forth we're seeing may be the opening shots of a trade war. Economists warn that these wide-ranging policies could disrupt supply chains and push up prices globally, and that’s spooked markets. Remember, however, that market volatility is a short-term companion.

Right now, the data still points to a cooling – rather than a collapse – in the economy. The “soft” economic data that measure sentiment are shaky, but the “hard” data that measure real activity hasn’t reflected the impact of these policies. Sure, they aren’t pretty for growth, but there’s still a wide band of uncertainty.

This global chess match highlights why diversification matters – when one part of the market feels the pinch, others can offer relief. Our General Investing portfolios, for example, have benefitted from their allocations to safe-haven assets like gold, which has gained 11% year-to-date. While the S&P 500 is down 1.5% for the year so far as of Tuesday, global equities excluding the US are up 6%. With strategic asset allocation, you reduce your exposure to concentrated risks while remaining positioned to capture the longer-term opportunities that inevitably emerge.

💡 Investors’ Corner: Fear, greed, and what you can do about it

The markets are giving investors a case of the jitters lately. Higher-for-longer interest rates, stubborn inflation, and shaky consumer confidence are all weighing on market sentiment. Add to that uncertainty about tariffs and geopolitical tensions in Europe, and it's little wonder we're seeing heightened volatility.

Yet this pattern of market anxiety is nothing new. Benjamin Graham, the father of value investing, described the stock market as "a voting machine in the short term, but a weighing machine in the long term." In other words, day-to-day prices reflect the mood of investors, while long-term returns reflect actual business performance.

CNN’s Fear and Greed Index captures this market psychology in action. This week, its needle moved firmly into "extreme fear" – historically, a signal that selling pressure might be nearing its end. The index reached extreme fear twice in 2024, and both occasions preceded market rebounds.

It’s why dollar-cost averaging makes sense. When you invest a fixed amount at regular intervals regardless of market conditions, you're naturally buying more shares when prices are low and fewer when they're high. Think of it as automatic bargain-hunting. And while it seems counterintuitive, buying into a downcast market provides a bigger margin of safety and upside potential when sentiment improves.

Beyond the numbers, this strategy offers something equally valuable: a psychological buffer against the human tendency to flee during downturns, or chase performance during rallies. After all, investing isn’t about avoiding volatility entirely – it’s about using strategies that look beyond the short term.

These articles were written in collaboration with Finimize.

📺 From The Newsroom To You

Is the S&P 500 all you need? In his latest piece for The Business Times, our Co-founder and CEO Michele Ferrario explores the benefits – and limits – of putting all your eggs into a single ETF like the S&P 500.

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