Market Risk and Reward: Investing During Global Trade Tensions

The White House is preparing to impose new tariffs on most imports starting April 2, escalating global trade tensions in what President Donald Trump has called “Liberation Day.” Over his first two months, Trump has raised tariffs on about $800 billion in imports from China, Mexico, and Canada, rattling markets and fueling recession fears. Despite the economic fallout and retaliation from trade partners, officials plan to expand tariffs on “trillions” of dollars in imports.

The plan has alarmed economists, congressional Republicans, and even some White House allies. Vice President JD Vance, Commerce Secretary Howard Lutnick, and Treasury Secretary Scott Bessent are leading discussions on implementing “reciprocal tariffs,” which would match foreign duties on U.S. exports. While Trump argues this levels the playing field, critics warn it could push U.S. tariffs to 1930s levels, harming global trade and consumers.

Markets have already reacted, with the S&P 500 down over 8 percent this month and the Nasdaq nearly 13 percent. Consumer confidence is at its lowest since 2022, and inflation expectations are rising. Some industries are lobbying for exemptions, but the White House remains firm. “Every member of the Trump administration is aligned on finally leveling the playing field for American industries and workers,” said spokesman Kush Desai.

Should You Be Investing During Such Times?

These tariffs could affect the broader market as they increase the costs of doing business with international partners, potentially impacting trade, profits, and economic growth.

“I think they are worried, and they should be worried,” said economist Ed Yardeni about investor concerns. “The last two months have already hurt American businesses and consumers, but the April 2 deadline could make all of that look like a tempest in a teapot,” added Joseph Politano of Apricitas Economics.

Considering the market risks, if the president enforces tariffs, it signals a commitment despite economic concerns. Negotiations or delays are possible, but a long-term approach may still be the best strategy, as history shows markets recover despite volatility.

“Tariffs from Trump's first term are still in effect, and the market has rocketed since then. History tells us that stocks will eventually move higher, even if there is short-term volatility or a sell-off. One strategy is dollar-cost averaging, where you invest a similar amount of money at regular intervals, smoothing out your cost basis over time,” an article from The Motley Fool explains.

Safer Investments During Market Uncertainty

Gold

Gold is considered a safe-haven asset during market uncertainty, preserving value amid inflation, volatility, and economic instability. Its historical role makes it a popular hedge against such risks.

According to the head of Base and Precious Metals Strategy at J.P. Morgan, “Gold looks well situated to hedge the elevated levels of uncertainty around the macro landscape as the Trump administration announces new executive policy initiatives over the coming weeks and months, including tariffs.”

Bonds

Government bonds also offer stability, preserving capital when held to maturity and shielding investors from equity market pullbacks.

“Yields on South African government bonds remain relatively high, making them an attractive consideration for investors seeking more predictable returns during periods of elevated equity market volatility - despite the associated risks and economic uncertainties ahead,” added Nilan Morar, VP of Trading and Trading Operations.

Conclusion

The sweeping tariffs set for April 2 mark a major shift in global trade, bringing both risks and opportunities. While markets may react with volatility, history favors those who stay focused on long-term growth. Investors can position themselves strategically by identifying resilient sectors, tracking corporate earnings, and adapting to policy shifts that create new opportunities.

Gold offers stability, with established miners being less volatile than junior explorers. Bonds provide security but require awareness of interest rate movements to take advantage of price shifts. The key to navigating uncertainty is resilience - diversify, manage risk, and stay proactive to unlock growth potential.

Government bonds offer a reliable way to earn fixed income by lending money to the government in exchange for regular interest payments

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