No News is Good News. Or is it?
For investors, news, good or bad is generally better than no news. Investors hate uncertainty, and with so much happening in Washington with no predictable outcomes yet, there is a lot to be uncertain about. Tariff debate by itself is creating enough uncertainty to send market on a ride, up or down.
Tariffs are taxes on goods imported from other countries, and when governments talk about adding new ones, investors react quickly. The back-and-forth of trade negotiations makes the stock market unpredictable. Some industries are affected more than others, and major stock indexes have been experiencing ups and downs because of it. For example, last month, news of possible new tariffs led to a big sell-off. Markets tend to fall when there is bad trade news and go back up when a deal seems possible.
How Investors Feel and Why It Matters
Investors are worried that tariffs will make goods more expensive, slow down economic growth, and hurt company profits. One investment expert said, "Uncertainty is the new normal," meaning that people are nervous because no one knows what will happen next.
A tool called the VIX (also called the "fear index") measures how nervous investors are. The VIX goes up when people expect more market swings. In February 2025, when new tariff threats appeared, the VIX reached its highest level in weeks.
Many investors move their money to safer investments, like gold and U.S. Treasury bonds, when trade tensions rise. But when trade talks show progress, the market calms down and people invest more in stocks again.
Which Industries Are Affected the Most?
Tariffs do not affect all businesses in the same way. Some industries are hit harder than others:
- Technology and Semiconductors
- Automotive and Manufacturing
- Retail and Consumer Goods
- Agriculture and Chemicals
- Banks and Finance
Looking at the Past: Have Tariffs Hurt Stocks Before?
This is not the first time tariffs have caused problems in the stock market:
- 2018–2019 U.S.–China Trade War: The stock market had big ups and downs as tariffs were introduced and later removed. The S&P 500 fell 4.4% in 2018 but jumped 31.5% in 2019 when a trade deal was reached.
- 2002 Steel Tariffs: President George W. Bush added tariffs on steel, and the stock market lost about $2 trillion in value.
- The 1930 Smoot-Hawley Tariff Act: This was one of the worst tariff decisions in history. It led to a worldwide trade collapse, worsening the Great Depression.
How the Rest of the World is Affected
Tariffs don’t just impact the U.S. They shake up global markets, too. When the U.S. announced new tariffs in 2025, stock markets in Europe and Asia fell overnight.
Even though tariffs cause problems, some investors have learned to ignore trade threats, seeing them as temporary. However, the stock market still reacts sharply to tariff news, and removing trade uncertainty would likely help boost global confidence.
In Summary
Overall, tariffs and trade uncertainty have made the stock market more volatile, with sharp swings based on political decisions. The indexes have all struggled at times due to trade tensions. Industries like technology, automotive, manufacturing, and retail have been hit the hardest. Looking at history, tariff discussion have never been good for the stock market. Until trade disputes are resolved, investors will likely continue reacting to every new announcement, keeping markets unpredictable.
Next up: What changes should you consider for your portfolio.
The views stated in this letter are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.