Tariff Tantrum: Why the Stock Market is Freaking Out (But You Shouldn't Be)
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The stock market is taking a nosedive thanks to Trump's surprise tariff announcement, and I'm cutting through the hysteria to tell you what's actually happening to your investments.
These massive new import taxes are spiking inflation fears, tanking corporate outlooks, and have investors running scared—but reacting emotionally is REAL threat you should be worried about.
For most of my Gen X, Millennial, and Gen Z inheritors, this market drama calls for one counter-intuitive move: doing nothing.
🗓️ Schedule a FREE call to see if your portfolio is ready to handle the threat of even more market swings.
Transcript:
Introduction to Market Volatility: What's Causing the 2025 Stock Market Downturn
Katherine Fox (00:00) Hey, I'm Katherine and thanks for joining me today at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, Millennial, and Gen Z inheritors.
I tackle a different topic related to investing, generational wealth, inheritance, financial planning, taxes, the whole game.
On this episode of the podcast, I'm talking about the question that's on everyone's mind. What the heck is going on in the stock market right now? So join me as we dive into it. Before I get started, I want to say at this point in the year, just after the end of the quarter, it's usually when I post my quarterly market recap video. So that's what this officially is. But
The fact is no one wants to talk about what happened last quarter, right? January, February, March, old news. No one cares about what was happening during those months when basically right at the start of the new quarter, we saw all of these huge tariffs come out from the Trump administration that have thrown the markets for an incredible spiral.
So I'm not gonna talk about what happened in the past three months.
I'm gonna talk about what the heck is going on in this tariff situation, a breakdown so you can understand why are the markets responding the way they are, what are tariffs anyway, what do I need to know? And then the piece that you might actually be wondering about, which is what am I supposed to do if I'm invested in the market and I'm worried about what's happening?
Trump's Global Tariffs Explained: How the 2025 Trade Policy Works
So let's start with a breakdown of what actually happened. Several days ago, the Trump administration, as they promised, released a sweeping set of global tariffs. Side note, if you aren't familiar with the Nate Silver Substack, I recommend that you check out one of his most recent posts where he actually talked about how the Trump administration, it looks like they just used AI literally to generate these tariffs, but not the point. The point is,
These tariffs are imposed on every nation in the world to varying levels, right? Like different countries will have different tariffs. And just to start by talking about what a tariff is, at its core, a tariff is a tax on goods coming into the US. So if Trump imposes a 40% tariff say on goods coming into the US from France,
then if you are a US company who makes your goods in France and then imports them to sell them to US consumers, well, if there was a 0% tariff before, your product is now 40% more expensive to make because it costs 40% more if there's a 40% tax to get your good from France into the US. Obviously, France is a bad example because most of the goods in the US aren't produced in France, right? They're produced in
China, Vietnam, all of these countries got hit with huge tariffs, including a lot of companies who had diversified their manufacturing out of China because of the threat of a US-China trade war. When they diversified out of China, they moved a lot of that manufacturing to Vietnam. Vietnam has over a 40% tariff now on goods being imported into the US.
Impact of 2025 Tariffs: Rising Prices and Economic Consequences
And so when you have these huge double digit taxes on basically every country where goods are made and brought into the US, that means that products are going to get a lot more expensive. It means that companies are going to have to pay more to get their goods here. And those prices in many cases are going to be passed on to consumers.
This might be mitigated. It may be that there are some countries that are able to negotiate lower rates. Big companies especially have a lot more pricing power. So they have more pricing power to squeeze their suppliers as opposed to squeezing their end consumers. But the fact is these tariffs are a huge tax on global commerce. So let's talk about what companies thought would happen when Trump was elected.
I think most big companies thought Trump was gonna be good for them. He's a business guy, he likes the stock market, he likes Wall Street. And what we have seen is that he does not care. He has not backed down from these tariffs despite the fact that you have leaders of huge companies, huge banks, and these tariffs touch every industry in the US saying that this is a game changer and not in a good way. And that's why we have seen the market basically
Enter this freefall is a strong word, but let's call it freefall for the sake of drama, right? So the market is sliding down because remember the stock market is a forward-looking vehicle. The prices that companies trade at are based on forward-looking market assumptions and the forward-looking market assumptions had been relatively stable. Trump then throws these huge tariffs into the mix and that whole picture changes.
Stock Market Response to Tariffs: Why Global Markets Are Falling in 2025
How much money companies are gonna be able to make, what the state of the US economy looks like, whether we're headed into a recession, all of those things have fundamentally shifted because of this new tariff regime that has been enacted. And that's why you see the stock market sliding, not only in the US, but globally, because the US is a major trading partner of tons of different companies around the world, right? And so if those companies...
can't sell their goods for the same price because of these tariffs, that's also going to affect their forward-looking picture. So investors are spooked. They are scared about not only what these tariffs mean for the forward-looking profits of companies around the world, but also for the fact that these tariffs are going to push us into a recession. People were already talking about recessions. This was a topic that was on people's minds. But remember, a tariff is a tax.
And in some cases, we're talking about 20, 30, 40% tariffs on goods coming into the US. So what happens when goods are taxed higher? Prices go up. What happens when prices go up? It contributes to this inflationary period that we've been in. And the Fed had felt pretty good about having that inflation under control. But when tariffs increase the price of goods, you contribute to this inflationary spiral. When companies are paying more, it means that they
have a higher chance of needing to lay off workers, right? So the tariffs also push the US further towards the possibility of a recession. And we're not gonna have any of these numbers. Like there won't be any more data on this for weeks or even months. But if you have an economist, like you have forward-looking analysts thinking about these things, that is what they're worried about.
Investment Strategy During Market Volatility: What to Do About Your Portfolio Now
So I've explained what it is, what's going on, what you need to know about all this stuff. But then the question becomes like, okay, I'm invested in the stock market. What am I supposed to do? And the biggest thing that I need you to remember is that the best thing that you can do is nothing. If you are young, if you're a current or future inheritor, you're invested in the market, these are long-term buy and hold positions. Just sit tight.
I know market volatility can be scary, but you don't need to do anything right now. It's not the time. But there are certain situations where that might not be true. So if you had money invested in the stock market, say for example, like you're looking to buy a down payment on a house, right? Then it might be that...
you want to take that money that is sitting in the market out if you think you're going to need it in the next few years. That can be a really hard decision to make. If you are right on the edge of retirement and now your portfolio is significantly lower, right? That can be kind of a difficult decision to manage. If those are the kind of concerns you have as you're a Sunny Branch client watching this, or if you are with a different investor, you're on that period of...
you need this money for a down payment, I need this to pay for college, I was thinking about quitting my job and taking a break, like, what does this mean for that? Then I definitely encourage you to reach out because those are the situations where a little bit more work and analysis is needed to really figure out how to navigate this situation when you have short term cash needs. But all of that being said, if you're not in that sort of exclusion boat where like you need...
cash soon and you need to figure out how to get it, which again, if that's the position you're in, please reach out to me, then the best thing you can do is just sit tight. It's not the point right now to be investing a bunch of cash in the market because it's just really not clear what's happening. There's a lot of emotion, there's a lot of fear, like even the full impact of these tariffs aren't known, it's unclear if Trump is gonna walk things back, you know, he can change his line on a whim as we know.
Managing Investing Anxiety: How to Stay Calm During the 2025 Market Downturn
It's just really about keeping yourself sane and collected and cool. And if that means that you don't check your portfolio, then that is the literal best thing you can do. Block the app on your phone, block the app on your computer, whatever it is, wherever you check that's causing you anxiety, stop checking. Because again, if you are a long-term buy-and-hold investor, the worst thing that you can do is get scared and sell out when the market is low.
Because then it becomes psychologically so difficult to know when to re-enter the market. And what we've seen over and over and over through the history of the stock market is that some of the best days of market performance are really close to or following severe downturns. And if you sell out when the market is moving down, you miss out on the potential for those periods and those days of really good returns. Now, I don't know when they're coming. You know, it's also possible that
these tariffs signal the end of US exceptionalism and the US stock market is never gonna be the same, but that is not information that we have right now. And that's not information that we can base decisions on because no one knows. And so if you're trying to do that, if you're like, I'm gonna put all my money in foreign bank accounts or gold or whatever, you are making decisions based on fear and you are making decisions on incomplete information and that is never a good thing to do.
Long-Term Investment Planning: When to Reassess Your Portfolio After Market Volatility
Then moving forward, how do you know when it is time to do something? You need to wait for the dust to settle a little bit, to think about rebalancing your portfolio, to revisit, you know, if you're in the right mix of stocks and bonds, depending how intellectually you kind of got through all of this, if it feels good, if it felt like, no, I was too stressed, like I need to make a change. If you're an investor who has a little bit more experience, you know,
You might have been through this in 2008. You might have been through this in 2020. You might be an old hat now just saying, just going to sit back and wait and do what I do and the markets will do what they do and we're good. But if you're a newer investor and this is the first time, then it can feel really scary. And I want to validate that it is okay to be scared. It's okay to feel uncertain. What I don't want you to do is make decisions based on that fear.
Because then it's that fear driving those decisions. They're not being made with the best interests of your long-term financial health in mind. But that being said, you should be working with an advisor who can help you deal with that fear and understand it and figure out a strategy that works for you moving forward. So if you're curious about what's going on in your portfolio specifically, what you should be doing, and you feel like that's not information you have either because...
you're doing it yourself, or because your investment advisor isn't giving that information to you, or if you're a Sunny Branch client and you want to talk about how specifically your portfolio is positioned, please reach out to me. I'd love to chat, talk about what's on your mind, and help you figure out the path forward. I've got all my information in the show notes, and I'll look forward to coming at you again from the next episode of Heir Necessities.
Let’s take the next step together
Understanding how taxes work after inheriting isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, you can reach out to Katherine Fox, CFP® and CAP®, a financial planner for inheritors to learn how Sunnybranch can help you understand and manage a vastly different tax picture after you inherit money.
