Understanding the New Tariffs: What Investors Need to Know  

The recent announcement of new tariffs by President Donald Trump has raised concerns about trade tensions, inflation, and market volatility. As an investor, you may be wondering how these changes will affect your financial plan and what steps you should take to protect your assets.  

What’s Happening?  

Trump has introduced sweeping new tariffs, including:  

• A 54% tariff on Chinese imports
• A 20% tariff on European Union goods  
• A 10% baseline tariff on all imports

These tariffs are intended to boost U.S. manufacturing, but they also carry risks, including higher costs for businesses and consumers, potential retaliation from trade partners, and increased economic uncertainty.  

How the Markets are Reacting

Financial markets have responded with volatility with the major benchmarks down and threatening to enter correction territory.

Investors are particularly concerned about:  

• Rising inflation: Higher import costs could lead to increased consumer prices.  
• Slower economic growth: If businesses face higher costs, expansion and hiring could slow down.  
• Retaliatory tariffs: Other countries may impose tariffs on U.S. exports, potentially hurting American businesses.  

What You Can Do as an Investor  

While market reactions can be unsettling, this is a time for strategic decision-making rather than panic. As financial planners, we are here to help you navigate the uncertainty and adjust your financial plan as needed.  

1. Review and Update Your Financial Plan  

Market conditions change, and your financial plan should evolve with them. If you haven’t updated your strategy in a while, now is a good time to reassess your risk tolerance, investment allocations, and long-term goals. Approaching retirement? We can run various scenario testing to help you determine if you need to make any adjustments to your plan.  

2. Diversify Your Portfolio

A well-diversified portfolio across different asset classes can help reduce risk. Consider balancing exposure to equities with alternative investments that may be less impacted by trade policies. This is why we recommend a risk-adjusted investment plan that’s well diversified across different asset classes, even when it appears that a single asset class or sector is dominating (ahem, large cap technology stocks) performance.  

3. Focus on Defensive Sectors

Industries such as healthcare, utilities, and consumer staples tend to perform better during economic downturns and periods of inflation. These sectors may offer more stability in the face of market turbulence.  

4. Consider Fixed-Income Investments  

Bonds and other fixed-income securities can provide steady returns and act as a buffer against stock market volatility.  For halal investors, the Azzad Wise Capital Fund plays this critical role in your portfolio.

5. Use Volatility to Your Advantage

Market fluctuations can create opportunities for investors who have the cash and time to stay invested. Rather than fearing volatility, consider using market dips to strategically buy quality investments at lower prices. As your financial planners, we can help you refine your strategy to take advantage of these opportunities while managing risk and staying aligned with your long-term goals.

Let’s Talk  

If you’re concerned about how these tariffs may affect your investments and financial future, we’re here to help. Schedule a meeting with your advisor to review your portfolio and ensure your plan is aligned with your long-term goals. Together, we can make informed adjustments to keep you on track—no matter what the markets do.