The financial market is now truly global in nature and favors a free-trade environment. The imposition of tariffs raises concerns for a trade war, which would hurt all parties involved.
On March 22, 2018 the Trump administration announced tariffs on some $60 Billion of imports from China. This set off a “tariff tantrum” in the financial markets. Stocks sold off by almost 3%, while safe haven assets like US Treasuries and Gold rose in value.
China almost immediately responded by imposing tariffs on numerous US goods exported to China.
The uncertainty caused by these back and forth tariffs will likely lead to increased volatility in the markets over the next few days and weeks. I would not be surprised to see stocks re-test the low from early February 2018, which is approximately 4% below the current level.
So far the selling has been orderly. More of a message to the politicians in Washington and globally, to not mess with free-trade than an all-out panic.
Your portfolio is designed to weather these short-term bouts of volatility. At the moment I am staying with our plan. If the situation changes I will make the appropriate adjustments.
Please feel free to call with any questions or concerns.