June Market Insight: Tariff Tantrums

July 2, 2018

2018 continues to be a bumpy ride as President Trump moves on with his “Make America Great Again” agenda. The president broadcasted his intentions throughout his presidential campaign, and often pointed to trade agreements such as the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP) as benefiting foreign economies at the cost of the US.1

All politics aside, tariffs will have a negative effect on the economy: they reduce the benefits of free trade and add uncertainty to the market. Investors have also been bracing for retaliatory responses from China, Canada, the EU, and more.

While the president understands the short-term pain that tariffs bring, he seems to be ready for a fight and claims, “Trade wars are good, and easy to win.”2 The endeavor seems to have come at as good a time as any, as many indicators point to a healthy and growing US economy (good corporate earnings, low unemployment, GDP, tame inflation). However, the question remains: Will tariffs and a trade war choke off corporate earnings and cause the market to turn?

The answer is unknown but our value-style investment principles apply through any market cycle. While we will experience volatility, our mutual fund managers are looking for buying opportunities as they focus on long-term returns.

We are here to guide you through your financial journey. If you have questions, or just want to check in, please let us know how we can help.

We wish you and your family a wonderful Independence Day!

Index June YTD 2018
S&P 500 Composite (Large Cap)0.62%2.65%
Russell 2000 (Small Cap)0.72%7.66%
MSCI World Ex-Us-1.10%-2.77% 
Barclays US Aggregate Bond-0.12%-1.62%

1. https://www.washingtontimes.com/news/2016/jun/28/donald-trump-vows-to-cancel-trans-pacific-partners/
2. https://www.washingtonpost.com/news/business/wp/2018/03/02/trump-insists-trade-wars-are-good-and-easy-to-win-after-vowing-new-tariffs/?utm_term=.0306e7f3530c

Keywords: market insight
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