Weathering Today’s Market Storm: A Long-Term Perspective on Trump’s Tariffs

Today’s market action has been tough to watch—the Dow dropped 3.22% as I am writing this, and the NASDAQ took a steeper hit at 5.49%. The trigger? Futures plunged overnight as news broke of President Trump’s new reciprocal tariffs, set to kick in today, April 3, 2025. With a 10% baseline on all imports and higher rates for key trading partners—like 25% on Canada and Mexico, and even more for China—it’s no surprise investors are rattled. But let’s step back, take a breath, and look at this through the lens that’s always served us best at Global WEALTH: the long term.

Imports make up about 13% of U.S. GDP, a sizable but not overwhelming chunk of our $27 trillion economy. At the 10% baseline tariff, we’re talking about 1.3% of GDP feeling the initial pinch. Factor in those higher rates—like 25% on Canada and Mexico—and estimates suggest the affected slice could climb to 2-3% of GDP in the short term. That’s real, but it’s not the whole picture. Markets often overreact to tariff headlines—today’s sell-off is a classic example—but the U.S. economy has a knack for adapting. Many conservative economists argue this will be a temporary jolt, not a lasting wound. The Tax Foundation, for instance, has modeled past tariff impacts and pegged GDP hits at 0.2-0.4%, with recovery as businesses adjust supply chains and trade talks evolve.

Here’s what I’m telling clients today: this isn’t the time to panic. Our strategy has always been about staying focused on your long-term goals—retirement, legacy, whatever drives you—not chasing the daily ups and downs. History backs this up. Frequent trading or reacting to every market dip rarely beats a disciplined, patient approach. Dimensional Fund Advisors recently noted that “by the time a downturn’s official, the worst is usually behind us.” Warren Buffett’s old line still rings true: “The stock market transfers money from the impatient to the patient.” We’re built to be the patient ones.

A few key points to keep in mind:

Small Scope, Big Noise: Imports are 13% of GDP, and tariffs initially hit about 1.3% of that at 10%, maybe 2-3% with higher rates. It’s a ripple in a massive economy, amplified by today’s headlines.
Short-Term, Not Forever: Conservative thinkers see this as a brief GDP dip—0.2-0.4%—with no major long-term drag as markets stabilize.
Resilience Rules: Remember 2018-2019? Businesses rerouted supply chains, and the economy rolled on. Expect the same here.
Eyes on the Prize: Studies from Fama and French show staying invested through cycles beats trying to time them. That’s our playbook.
Leverage at Work: Trump’s team views tariffs as a negotiation tool. If trade partners blink, the impact could soften fast.

Today’s drop stings, no doubt. But it’s noise, not the signal. The U.S. economy is tough, and our approach at Global WEALTH is tougher—built to ride out these storms and keep your goals in sight. Got questions? I’m here. Let’s talk.

Jim Palumbo is the Principal and Sole Investment Advisor at Global WEALTH. Views expressed are his own and not investment advice.

Photo by Johannes Plenio: https://www.pexels.com/photo/red-and-white-lighthouse-1105382/