Tariffs and Volatility: Turn Down the Volume

This week, we sent the following communication to all Ferguson Wellman and West Bearing clients in response to heightened market volatility. We felt that this message was also appropriate to reiterate for our weekly blog.

When we presented our 2025 Investment Outlook to clients earlier this year, one of our key points was that there was going to be a lot of noise and rhetoric surrounding tariffs. Our view was that the rhetoric would be worse than the economic impact.

While U.S. markets expected an onset of tariffs this year, what is agitating investors is the uncertainty regarding implementation as well as the view that tariff rates, once enacted, are going to be higher than originally expected. The current rate of change in Washington D.C. only adds to the concern over what the regulatory environment will be going forward. We acknowledge that regardless of political affiliation, the amount of and speed at which these changes are occurring can be jarring. This uncertainty has spilled over to consumer and business confidence, leading economists to lower their estimates for GDP growth in 2025. This result is a classic growth scare, creating a “risk off” environment resulting in a roughly 10% pullback in the S&P 500 over the last three weeks.

This Has Happened Before