April 4, 2025
Filed under: General
On Wednesday, President Trump announced a series of tariffs on all of our trade partners. The base tariff appears to be 10% with differing tariffs depending on the other countries’ tariffs against the U.S. These tariffs range from a high of potentially 54% for China when you include prior imposed tariffs, 48% for Vietnam, 46% for Laos and similar high tariffs for other SE Asian countries, 24% for Japan and 20% for the EU. Foreign auto tariffs will begin today so consumers will need to think hard about those kinds of purchases right now. The EU is weighing its options but not clear how it will respond. While Wall Street hoped for certainty, this may not be the “certainty” they looked for. It is helpful to understand the Administration’s approach, but there are several next steps that need to be watched to understand the true impact of these proposed actions:
- How will our trading partners respond?
- How will businesses respond- pass on the costs to their customers or cover the cost? This will most likely depend on the size of a business and its ability to negotiate with its suppliers, the cashflow of the company, and other factors. Larger companies (think Walmart) may be able to weather this better than your local boutique store.
We will probably see less optimistic corporate earnings or earnings forecasts going forward, but it’s too early to tell.
And what about the markets? The overnight futures were quite negative, and we are opening quite down, but again, it’s early. Investors need to be careful not to be “whipsawed” by selling on negative news only to see more sophisticated traders (often computers) swoop in and buy on the initial dip.
At this point, as much as we wish we could provide a better sense of what’s next, it’s too early to know and we all need to stay informed and not act prematurely. At Omega, we are committed to staying on top of what we are hearing and interpreting it all for you.
Omega has been implementing its regular procedures to make sure clients’ short-term cash needs are met and bond portfolios are better aligned with current economic conditions. For our clients with IRAs and at the age of “Required Minimum Distributions”, we are taking those to cash now in anticipation of distributions sometime this year.
Beyond that, we need to generally stay the course, but we also welcome inquiries to address any specific questions or concerns you may have. Don’t hesitate. That’s what we are here for.
Hang in there and stay tuned.
SPOILER ALERT: While your Q1 Performance report statements will not be out for a couple of weeks, the damage may not be quite as bad as the headlines. International markets and bonds have helped buffer some of the US stock market losses. It’s still not great, but maybe not quite as bad as you thought. If you want to see how you are doing real-time (but please don’t check all the time), you can log into SEI Connect to view your accounts and performance.
lisa