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Trade Tensions & Market Moves
- Ascend Advisory Group
- May 1
- 4 min read
Updated: May 6
Trade Tensions & Market Moves
By Chase Fowler, CFP®, Financial Advisor
How investors can navigate volatility amid global tariff shifts and policy uncertainty
Markets are currently seeking stability and, ultimately, resolution when it comes to global trade decisions.
In a recent interview, Mark Rowan, CEO of Apollo Global Management, stressed the importance of the U.S. securing new trade deals with key partners like Mexico, Canada, and the EU to reduce uncertainty moving forward.
We believe as we head into the coming months, we’re likely to see more shifts in direction, policy reversals, and new agreements begin to form.
While this process may bring continued short-term volatility, I believe it is important to stay patient as investors. Patience will be the bridge to achieving longer-term investment returns.
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What’s Moving the Market?
Equity and fixed income markets are experiencing volatility as the U.S. has increased tariffs on China, prompting retaliatory tariffs from China. This also includes lingering lower-level tariffs across various countries, as the Administration begins the process of negotiating new trade deals on a global scale.
Our Take
Markets are looking for certainty, and ultimately finality, in these trade decisions. The ongoing changes have caused significant swings, as investment houses attempt to factor in the potential impact on corporate earnings. Current economic data is beginning to cool, supported by a recent soft inflation report. As first-quarter earnings roll in, we’re seeing more companies issue cautious guidance, reflecting a lack of clarity about the economic environment ahead.
Investor Takeaways
We believe these moments of volatility can create opportunities for investors who focus on high-quality companies with strong earnings power and healthy balance sheets—traits that help weather shifts in policy. Many businesses took proactive steps earlier this year, such as increasing inventories or sourcing from alternative countries, to hedge against rising tariffs. However, a cautious approach remains wise, as prolonged trade conflicts could weigh on future earnings growth. It’s also important to remember that we are long-term investors, and the market has endured similar periods of policy-driven uncertainty in the past.
How Should We Respond, from Ascend's Point-Of-View
As we continue, I’ll highlight key points regarding trade wars and tariffs, but the core message for investors is simple: stay patient. As shown in the chart below, large intra-year declines are a natural part of investing.
As investors, we must remain patient and our current allocations should remain aligned with long-term financial goals. Reacting emotionally to volatility by exiting the market could mean missing the recovery—and that can diminish long-term returns.
How Will These Tariffs Affect the Market?
A tariff is a tax imposed by a government on imported goods or services, typically with the aim of boosting domestic production and demand. The top five imports to the US by value in 2023, according to The Mechanics of Tariffs: What You Should Know | Advisorpedia, were:
machinery
electrical machinery and equipment
vehicles (including parts)
mineral fuels (including oils)
and pharmaceuticals
With the tariff landscape constantly evolving, we still don’t know what the “final” set of long-term tariffs—if any—will look like. As Mark Rowan recently pointed out, sealing deals with Mexico, Canada, and the EU could significantly reduce uncertainty. These core partnerships could help stabilize some of the short-term market fluctuations while the longer-term landscape takes shape. On the other hand, trade talks with China may take more time to develop, given its export-heavy economy and desire to retain its competitive edge in key sectors.
While we don’t yet have a full picture of this administration’s endgame. The below highlights some of the long-term economic goals and strategies being pursued.
DECOUPLING: Shifting supply chains and reducing reliance on certain countries
High / persistent for China
Industries include tech, energy, industrial materials, pharma, biotech, aircraft
REBALANCING: Reduce trade deficits and boost domestic production
Medium/ persistent / mixed for China, EU, Japan, South Korea, Vietnam, India, Mexico, Canada & Brazil
Industries include auto, steel, aluminum, agriculture, food, chemicals, consumer electronics, pharma, luxury, defense, energy, oil
NEGOTIATING: Use economic pressure to achieve policy outcomes
Low / temporary for China, Mexico, Canada, EU, Japan, Latin America
Industries include auto, steel, agriculture, consumer electronics, construction machinery, minerals, defense, energy, semiconductor equipment
FUNDING: Generate revenue to fund budget priorities
High / persistent for a broad applied universal tariff
Industries include consumer goods, auto, industrials. Price effects and margin pressure across industries
Most investment professionals agree that the Administration is working to reduce the trade deficit, stimulate domestic manufacturing, and build more resilient supply chains—especially those less reliant on China. These sweeping policy changes have undoubtedly increased volatility, but as mentioned earlier, markets have faced similar environments before. We’re likely to see continued policy shifts, reversals, and new deals emerge. Many investors will remember the 2018–2019 period when tariff headlines drove market swings, yet investments remained resilient over time.
What we do believe is this: the global trade environment will likely continue to evolve in the months ahead. We also believe that thoughtful, long-term investment plans are built to absorb moments like these. Short-term volatility is often the price we pay for long-term returns.
If you have any questions, please reach out to your financial advisor.
*The S&P 500 Index consists of 500 stocks chosen for market size, liquidity, and industry group representation. It is a market value weighted index with each stock's weight in the Index proportionate to its market value.
