Market Turmoil Intensifies Following Sweeping New Tariff Policy
As of Monday, March 10, the United States implemented sweeping new tariffs: a 25% levy on all goods imported from Mexico and Canada (with Canadian energy taxed at 10%), and an additional 10% tariff on all Chinese goods. But the economic ripples became shockwaves this week, as former President Trump announced a dramatic expansion of the tariff regime on April 2, escalating trade tensions and sending global markets into a tailspin.
In the 48 hours following the announcement:
The S&P 500 plunged by 10.27%, marking one of its worst two-day stretches in over a year.
The NASDAQ 100 dropped 11.44%, as technology stocks bore the brunt of fears over supply chain disruptions and rising input costs.
In Europe, the Stoxx 600 Index declined 3.8%, while major Asian indexes closed between 1.2% and 2.6% lower.
Bond yields in the U.S. dropped 10–15 basis points across the curve, as investors fled to safe havens.
The newly enforced tariffs have pushed the average effective tariff rate on Chinese imports to 34%, up sharply from 14% at the beginning of the year, marking the highest U.S. trade barrier level since World War II. These policies now affect nearly all major U.S. trading partners, leaving global supply chains bracing for extended disruption.
Economists and strategists warn that the duration of these tariffs will determine their impact. If prolonged, they are expected to dampen U.S. growth while stoking inflationary pressures, particularly in sectors like automotive, food, and consumer electronics. Mexico and Canada—deeply intertwined with the U.S. economy—are projected to face a disproportionately larger economic hit.
Despite the heightened volatility and economic risks, the Federal Reserve has not signaled any immediate policy response. It is widely expected to adopt a wait-and-see stance, reluctant to lower rates for fear of rekindling inflation that has only recently moderated.
With market swings now more frequent and sharper, investors are urged to reassess their portfolios:
Volatility is not new, but elevated levels underscore the need for a well-diversified global strategy.
Consider rebalancing toward non-correlated assets such as gold or alternative income-generating strategies, especially as equities face headwinds.
Fixed income remains an important anchor, helping stabilize portfolios during macroeconomic shocks.
Our investment team continues to monitor these developments and remains committed to keeping you informed. We are actively evaluating the implications for asset allocation and global exposure in light of these new risks.
In the meantime, if you’d like to review your plan or have questions about how these changes might affect your investments, we are here to help.
Christopher Nolan
Senior Financial Analyst at Savoir Strategy Group
