“What should we do about tariffs?”

It’s a question I’ve been hearing a lot lately, often with a hint of concern. Tariffs have been making headlines, and uncertainty is rippling through the markets. In this post, I want to address this concern, not just by looking at the facts but by discussing how we, as investors, should think about volatility and uncertainty.

Understanding the Tariff Impact

If you’ve been following financial news, you know the markets have been on edge. Recently, new tariffs were implemented: a 25% tariff on Canadian and Mexican imports¹ and an additional 10% tariff on Chinese goods¹, adding to the 10% duty from last month. The reaction was swift. On March 4, the Dow plunged over 600 points², and the NASDAQ has been teetering on the edge of correction territory.

When events like this happen, fear starts creeping in. Investors begin asking questions: Are we headed for a market correction? Will the economy slide into a recession? Should I change my investments? Should I pull out of the market entirely? These are the questions dominating conversations, both online and in the workplace. But are they the right ones to ask?

The Real Risk of Tariffs

Tariffs are more than just a political bargaining tool. While they can generate revenue and influence trade negotiations, they also increase business expenses, which can reduce corporate profits. More often than not, companies pass these costs to consumers through higher prices, contributing to inflation—something we’re already battling.

But beyond the immediate financial impact, the real issue is uncertainty. Investors don’t know how long these tariffs will last, whether they will increase, or what their full economic impact will be. That unknown is what fuels market volatility. As the writer H.P. Lovecraft once said, “The oldest and strongest kind of fear is always the fear of the unknown.”

Why Fear Can Lead to Costly Mistakes

When fear sets in, our natural instinct is to act. If you know it might rain, you bring an umbrella. If you expect rush-hour traffic, you leave early. These are short-term solutions for short-term problems. But investing isn’t about the short term—it’s about long-term strategy.

One of the biggest mistakes investors make is reacting to fear in ways that can have long-term consequences. Pulling out of the market in anticipation of a downturn might seem like a smart move, but it’s incredibly difficult to time the market correctly. As legendary investor Peter Lynch once said:

“Far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in corrections themselves.”³

Time and again, investors sell off assets in panic, planning to reinvest when things “calm down.” But more often than not, they miss the rebound, sitting on cash while the market climbs back up.

A Better Approach: Think Like a Gardener

A more effective way to think about investing is to view it like tending a garden. When you plant a garden, you don’t uproot your tomato plants and replace them with squash at the first sign of bad weather. You don’t move everything into pots because there’s a chance of hail. Instead, you choose the best possible soil, plant with care, water only when necessary, and harvest when the time is right.

Investing should be the same. You don’t make drastic changes based on short-term volatility. You stay patient, stick to a well-thought-out plan, and trust in the process. The market will have ups and downs, but long-term discipline is what leads to success.

The Questions You Should Be Asking

Instead of reacting to market turbulence with fear, consider these questions instead:

• If I pull out of the market now, how will I know when to get back in?
• Would I rather endure a short-term correction or risk missing out on a long-term recovery?
• Do I really want to sell investments I believe in, only to buy them back at a higher price later?

Final Thoughts

Tariffs and trade wars are real concerns, and market volatility can be unnerving. But at Assurance Wealth Management, we don’t let fear drive decisions. We focus on patience, discipline, and consistency—the qualities that lead to long-term financial success.

While we can’t control tariffs or market reactions, we can control our own response. We can remain patient, stay focused on long-term goals, and make informed decisions based on strategy rather than short-term market movements. Market fluctuations are a normal part of investing, and historically, disciplined investors who stick to a well-diversified plan tend to see better outcomes over time.

Rather than reacting to headlines, now is the time to ensure your financial strategy aligns with your individual goals and risk tolerance. Staying invested and maintaining a diversified portfolio can help manage risk, though it’s always important to review your plan regularly and make adjustments as needed.

If you have questions about how tariffs or market conditions could impact your financial future, give us a call at (281) 440-4200 to schedule a time to review your portfolio and discuss strategies tailored to your needs.

Sources
¹ “Trump puts tariffs on thousands of goods from Canada and Mexico,” CNBC, https://www.nbcnews.com/politics/economics/trump-puts-tariffs-thousands-goods-canada-mexico-risking-higher-prices-rcna194542
² “Dow tumbles again, loses more than 1,300 points in two days,” CNBC, https://www.cnbc.com/2025/03/03/stock-market-today-live-updates.html
³ “From the Archives: Fear of Crashing,” Worth.com, https://worth.com/from-the-archives-fear-of-crashing/

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