Monthly Market Insights - April 2025
Greetings Team,
Tariffs & Trade Wars: Navigating Murky Waters
As April wraps up, it feels like the market’s still playing a game of tug-of-war. On one side, we’ve got tariffs, trade talks, and the ever-present question of whether the U.S. economy can weather the storm. On the other side, we see a resilient U.S. economy and potentially earlier rate cuts from the Federal Reserve.
In this issue, let’s dive deep into trade waters. We’ll explore the evolving tariffs and their impact on global trade and the U.S. dollar, while giving you a snapshot of how the markets have performed since March.
Markets in Review: Mixed Moves
April left most investors feeling a little seasick. We rode some nice swells, but the ship was also underwater at one point. The S&P 500 and Dow Jones ended the month with some minor losses, while the NASDAQ snagged a small victory, thanks to the tech sector’s resilience.
📉 S&P 500: 5,569.06 (-0.76% MoM | -5.10% YTD)
📉 NASDAQ: 17,446.34 (+0.85% MoM | -9.51% YTD)
📉 DOW: 40,669.36 (-3.17% MoM | -4.06% YTD)
The takeaway? Broader markets are still trying to find their footing, with some sectors underperforming while others are holding on for dear life. The good news? The worst of the storm may be behind us, as markets price in potential tariff impacts.
Tariff Talk: What You Should Know
“Tariffs”: the latest media buzzword on every channel. It’s the “big stick” our current administration is swinging at old trade policies, hoping to shake out some new bargains. But what exactly are tariffs, and why does everyone want to talk about them?
In short, tariffs are taxes imposed on imported goods. On paper, they protect domestic industries from foreign competition while generating additional revenue for governments. In practice, tariffs are the go-to bargaining chip in modern trade negotiations.
For our current Administration, the very threat of new American tariffs has rewritten old trade alliances in real time. The global economy has been effectively disrupted, bringing many countries to the negotiating table as President Trump pushes the deadline.
A Rising Tide: High Tariffs Lift All Prices
Although tariffs can be handy tools for getting negotiations started, they aren’t without their drawbacks. The biggest problem with tariffs is that they’re inflationary, which means they make just about everything more expensive for everyone.
But interestingly, that doesn’t seem to be the case just yet. Here’s what’s happening:
- President Trump's new trade policy has caused ripples in the global economy. Proposed tariffs have led to higher costs for U.S. businesses and consumers. Chinese manufacturers and exporters, in particular, are also feeling the heat.
- In a surprising twist, the latest CPI report for March showed that inflation cooled slightly, dipping to 2.4% YoY, down from 2.8% in February. In other words, inflation is actually falling weeks after the tariffs first hit airwaves.
- Consumer spending surged in March, an unexpected economic boost that might signal the economy’s resilience. Are Americans front-loading purchases to beat tariff price hikes down the road? Only time will tell.
Bigger Picture: Are Tariffs Hurting the Dollar?
Ken Griffin, founder and CEO of Citadel, recently raised concerns that the administration’s trade policy and stance on tariffs might tarnish the U.S. dollar’s standing as the world’s top currency. But German Finance Minister Jörg Kukies quickly jumped in to reassure markets, stating emphatically that the U.S. dollar remains robust and continues to be the global reserve currency.
Morale of the story: while tariffs may lead to short-term disruptions, the long-term stability of the greenback isn’t in jeopardy just yet. Maybe expect some short-term volatility (like we saw in the past couple weeks), but don’t bet on the dollar sinking anytime soon.
Looking Ahead: Two Levers Left to Pull
Going into May, there are two major economic levers that, if pulled, could lift the markets out of their holding pattern and steer them back in the right direction:
1. New Rate Cuts: The Fed may decide to cut interest rates before the year’s end, with some experts expecting another rate cut by June or July. The sooner the better.
2. Easing Tariffs: The Trump administration could strike deals with key trading partners, like India or Europe, to ease some of the tariff talk uncertainty. If we see progress with trade negotiations, it could trigger a domino effect as more countries come to the table.
While the global economic landscape is without a doubt uncertain right now, these two levers could still be the catalysts for positive change in the coming months.
Staying The Course
In times like these, it’s easy to get caught up in all the drama. But as Jamie Dimon once wisely said, “Markets are volatile, but if you hold on, you’ll often find yourself on the podium when the final buzzer sounds.”
The name of the game? Keep your head up and stay focused on the bigger picture of what you can actually control. You’ll find 10 times out of 10 that sticking to your strategy pays off in the long run.
So, let’s stay focused. Keep your eye on the long-term prize. As always, onward and upward.
Steven and Daniel
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STEVEN W. SCHMITT, MBA, CFP®, CPM®, CRPS®, ADPA®
Managing Director, Private Wealth Advisor
CA Insurance # 0G61253
The Schmitt Group of Raymond James
Raymond James & Associates, Inc. // 3CV
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