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The recent trade announcement between the U.S. and China reverses many of the tariffs that rattled financial markets beginning in April. This agreement, which lasts 90 days, lowers U.S. tariff rates on China from 145% to 30%, and China’s rates on U.S. goods to 10%. Along with tariff pauses on other trading partners, and a newly announced trade deal with the U.K., markets are hopeful that a drawn-out trade war is now off the table. What does this changing market narrative mean for long-term investors?
Concerns that a trade war will lead to a recession have recently spread around the globe. The possibility of retaliatory tariffs is on investors’ minds, with China responding with counter-tariffs, increasing the odds of a worst-case trade war scenario. Markets in Asia and Europe have declined alongside U.S. stocks, and there has been a “flight to safety” as bond prices rise and interest rates fall.
On April 2, President Trump announced new tariffs on nearly all major trading partners. These tariffs are “reciprocal” in that they correspond to tariffs each country imposes on U.S. goods and are on top of previously announced duties.
The stock market has stumbled year-to-date, with the S&P 500 and Nasdaq both declining. While tariffs have garnered the most attention, investors are also concerned about mixed economic signals, including weak consumer confidence, hotter inflation, government worker layoffs, and more. Some are now wondering if there will be a recession, and President Trump did not rule out the possibility in recent interviews. How can investors maintain perspective in this challenging market and economic environment?
Trade headlines continue to weigh on markets as new tariffs go into effect. President Trump recently confirmed tariffs on Canada, Mexico and China, dashing hopes of more extensions or last-minute deals. Additional tariffs are expected in the coming months, including reciprocal ones against countries that impose duties on U.S. goods
Politics touches so many aspects of our lives, from our financial stability to the future we envision for our families, that it’s natural to feel personally and directly impacted.
