Casual Finance Fridays: Scared? Trade Policies and Market Volatility
By: Steven Higgins Financial Advisor, Registered Principal
Over the past month, the stock market has grappled with renewed volatility driven by uncertainty surrounding the Trump administration’s evolving global trade policies—particularly tariffs. In early March, the S&P 500 dipped into correction territory, falling more than 10% from its all-time high. Although markets clawed back some ground by the end of March, the S&P 500 is once again down approximately 11% at the time of this writing.
This marks the second 10% correction in just eight months, the previous occurring in August. While such corrections are normal—averaging about once per year—it’s moments like these, when politics and markets intersect, that can heighten emotions and lead to short-sighted decisions.
Clients of Higgins & Schmidt know that our investment philosophy is built for times like these. Our process acknowledges the natural ebb and flow of market cycles and is grounded in long-term strategy rather than reactive moves.
Here are three things we encourage our clients to focus on:
1. Diversification Works
While the headlines often focus on the S&P 500, diversified portfolios are weathering this year’s volatility with resilience. Year-to-date, other asset classes—such as bonds, international equities, and value-oriented stocks—have shown relative strength. Diversification is not just about protecting against risk; it’s about capturing opportunity in a range of market conditions.
2. A Disciplined Process Is Key
Our process includes a systematic reduction in risk as markets rise—like they did in 2024—and strategic additions during declines, when values become more attractive. These calculated adjustments may seem subtle, but over time they contribute significantly to portfolio stability and long-term outcomes.
For more detail on our recent allocation changes, we encourage you to read “Finding Perspective and Opportunity Amid Market Volatility & Recession Fears” by my partner, Allison Schmidt, CPA, CFP®.
3. Portfolios Should Reflect Income and Liquidity Needs
For clients drawing regular distributions, we maintain a strategic reserve—typically equal to five years of anticipated withdrawals—invested for stability and liquidity. This ensures that your income needs are insulated from stock market volatility, preserving peace of mind regardless of market headlines.
Expanding Tariff Measures: What we know and what we don’t.
markets responded swiftly to President Trump’s announcement of sweeping new reciprocal tariffs targeting major trading partners. These duties—averaging 25% and reaching as high as 49%—go beyond prior expectations. The S&P 500 dropped 3% following the news, and 10-year Treasury yields fell to around 4% amid a flight to safety.
The new tariffs mark a significant shift in global economic relations. Rates vary based on bilateral trade deficits: China now faces a 34% rate (plus preexisting 20% duties), while EU nations are subject to 20%. Canada and Mexico retain 25% duties under existing provisions, and all auto imports are now subject to a universal 25% tariff.
While views differ on the policy’s merits, its implications are wide-ranging. Historically, tariffs were a major source of federal revenue prior to the introduction of income tax in 1913. Today’s policy, framed under the “Make America Wealthy Again” initiative, aims to rebalance global trade and revive domestic manufacturing. However, critics warn of potential downstream effects on consumer prices, especially given persistent inflation concerns.
Short-Term Uncertainty, Long-Term Resilience
We’ve seen this before. Whether it’s 2018’s trade tensions, pandemic-driven disruptions, or inflation and recession fears—markets have proven remarkably adaptable. Companies may shift supply chains, earnings forecasts may adjust, and certain sectors may feel pressure. But history remains clear: long-term discipline has consistently rewarded patient investors.
Perspective. Process. Poise.
As always, we are here to talk. If you have questions, concerns, please don’t hesitate to reach out. At Higgins & Schmidt, we take pride in our ability to bring clarity and confidence during turbulent times. This is when we’re at our best—and we’re absolutely up to the task.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Higgins & Schmidt Wealth Strategies, a registered investment advisor and separate entity from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and asset allocation does not ensure a profit or protect against a loss. Stock investing involves risk including loss of principal. Bonds are subject to market and interest rate risk if sold prior to maturity.
The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries
