A Smarter Way to Think About Tarrifs

01

Responding to Market Panics + History Lessons

KEY POINTS

• Markets move on expectations vs.reality, and unfortunately the April 2 announcement was far worse-than-expected in terms of size and breadth of tariffs.

• When all the tariffs get put into a blender, the effective U.S. tariff rate jumps to ~20%, while baseline consensus was for an effective tariff in the ~10% range.

• One positive spin is that the administration’s starting point is at maximally punitive levels, as reflected in the market’s sharply negative reaction.  

• This implies that any modicum of good news on trade will factor as a positive surprise for markets going forward, which will almost certainly trigger strong moves in the other direction. This should be your content’s ultimate message and focus.

ANGLES FOR THE CONTENT

Remind clients just how critical it is to participate in the strong rallies that follow steep declines, corrections and bear markets.

Case-in-point: If you put $10,000 into the S&P 500 on January 1, 1980, and then missed just the 5 best days in the market, you would have given up over half a million dollars.