April 18, 2025
A four-part series on tariffs, markets, and the stories we tell ourselves
So far in this series, we’ve looked at the path that brought us here—the evolution of tariffs across administrations—and we’ve talked about the fragile ground those policies are landing on today.
Now it’s time to talk about the markets.
It’s easy to think the market is reacting to a single headline. Sometimes it is. More often, it’s responding to tone, timing, and the emotional atmosphere surrounding a decision. This is especially true in a world where information moves faster than context.
Let’s go back to the timeline—only this time, let’s follow the S&P 500.
When Policy Meets Market
2018: The first waves of tariffs under President Trump introduced uncertainty. Markets wobbled. The S&P 500 ended the year down roughly 6%.
2019: Despite the ongoing trade war, the market rebounded sharply, gaining nearly 29%. Investors adapted.
2020: The pandemic rewrote everything. Volatility was high, but tariffs faded into the background.
2021–2024: Under President Biden, tariffs remained in place and new ones were introduced. The market, for the most part, held steady. Policy felt measured. Surprises were few. Investors focused elsewhere—on interest rates, inflation, and recovery.
April 2025: Trump returns to the stage with a new, sweeping set of tariffs: 10% on all imports and 125% on Chinese goods. The S&P 500 falls 12% in four days. Tech and consumer sectors take the hardest hits. Volatility spikes. Commentators reach for comparisons to 2008.
So what changed?
The tariffs were broader, yes. The economic backdrop was more fragile. But there was something else: the tone.
The Market Responds to Mood
As we discussed in Part I, policy tone matters. A 10% tariff announced via official memo lands differently than the same number delivered on a debate stage or in a flurry of headlines. The content may be the same. The context is not.
The market doesn’t just respond to what is happening. It responds to what might happen next.
This is where the megaphone of AI, media, and tone all start to blur. A calm announcement suggests limits. A volatile tone implies escalation. The difference is subtle, but it can move trillions of dollars.
We’ll explore that more fully in a weekend note—how tone and media framing influence perception, and what that means for how we respond to economic news.
A Few Thoughts for the Long-Term Investor
Markets are reactive by design. They are not always rational. They reflect emotion, fear, and the speed of information more than fundamentals in the short term.
What matters more is the story underneath the noise.
Yes, tariffs matter. So does the debt. So does AI.
But more than anything, what matters is our ability to pause—to read the room, not just the headline. This is not the first moment of volatility, and it will not be the last. What we know from history is that context, not panic, builds better outcomes.
Coming this weekend: A final piece on tone and headlines
We’ll take one more step back. The volume is up. Emotions are high. What does it mean to be steady and thoughtful when the story feels too loud to follow? We’ll talk about that next.
On a final note, I have loved the discussions that have taken place as a result of these notes. Happy to discuss anything you may be thinking or hearing out there.
Lauren
The most important thing in my life is my family. My husband, Andrew, and our three smart and brave daughters.