Current Market Commentary

April 4, 2025

Yesterday’s market selloff, triggered by the announcement of new import tariffs, resulted in the largest single-day decline for markets since the COVID pandemic, with the S&P 500 falling 4.8%. At a White House ceremony yesterday afternoon, President Trump unveiled across the board 10% “reciprocal” tariffs on all imports entering the US, with additional country-specific tariffs to follow. Trump cited a national economic emergency and a $1.2T trade deficit as justification for the measures, aiming to boost domestic production and job creation. 

A baseline tariff of 10% on all goods entering the US will go into effect on April 5. Additional country-specific tariffs will go into effect on April 9, though the extent of the tariffs and which countries will be included remains unclear. Until yesterday’s announcement, markets remained optimistic that Trump would simply use the threat of tariffs as a negotiating tactic to renegotiate trade agreements. With the tariffs now set to take effect, today’s selling marked a recalibration by markets as to the potential economic impacts that may follow. Under the new levies imposed by Trump, the U.S. tariff rate on all imports will increase to an average of 22%, up from just 2.5% in 2024, marking the largest change to global trade since the Second World War.

For investors, today’s volatility might feel jarring. However, taking a step back can provide a helpful perspective. Currently, economic fundamentals remain constructive. Labor markets are generally healthy, consumer spending is positive, and inflation is slowly moving back to the Fed’s longer-term 2% target. Corporate fundamentals are also strong with fourth-quarter earnings growth of 18% and forecasted first quarter earnings growth of 7%. From a market standpoint, following today’s pullback, the S&P 500 is now trading at the same level it was last August, still nearly 2.5x times higher than its COVID lows and 67% above January 2020 levels.

Despite the current period of uncertainty, investors should remain focused on their longer-term financial goals. Trying to “time” trade policy announcements, similar to trying to time any other market event, should be avoided. Instead, we would encourage you to view current market developments in the context of your broader financial plan which invariably takes into account such periods of volatility. Should you have any questions or concerns about your investment portfolio or broader financial plan, please do not hesitate to reach out to your First Western portfolio manager or other points of contact.

— First Western Trust’s Investment Research team

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