Tariff Timeout

Published On: April 11, 2025

Written by: Ben Atwater and Matt Malick

On Wednesday, the Trump Administration paused some of the more egregious tariffs that it had just implemented twelve hours earlier.

With the announcement, stocks surged, and the market posted its third biggest one-day gain in post-World War II history. As we wrote to you last week, it is impossible to time the market because missing the best days will ruin your long-term returns. As we witnessed Wednesday, this is not simply financial advisor rhetoric.

The planned tariffs ushered in extreme levels of uncertainty, leading to crashing equities and spiking interest rates. Below you will see the global economic policy uncertainty index leading into Wednesday. It was at a more than 30-year record high.

Policy uncertainty is a kind of economic risk where the future path of government policy is uncertain, which leads businesses and individuals to alter spending and investment plans until they see a resolution.

The uncertainty was a direct result of the Trump Administration’s massive tariff regime. Before the delay, tariffs were to return to 1910 levels – higher than the infamous Smoot-Hawley tariffs during The Great Depression.

Most economists and investors agree that tariffs hurt economic growth and raise prices. They are a regressive form of taxation, which hits hardest the people who must spend the highest percentage of their incomes on necessities.

Legendary investor Warren Buffett sums it up well when he says that tariffs are a tax on goods and that the “Tooth Fairy” does not pay for tariffs. Consumers pay for them.

In a country where 70% of gross domestic product (GDP) is consumer spending, a massive regressive tax on consumers would surely lead to a recession. The markets are beginning to price in this potential.

On Wednesday morning, some clients were asking about reducing equity positions. By Wednesday night, others were inquiring about buying since the market had “bottomed.”

Again, timing the market is impossible. Every human instinct runs contrary to market timing.

By Thursday, the market was back to getting another shellacking, and as you read this on a Friday, it is anyone’s guess what will happen by the close.

We are by no means out of the woods. Tariffs remain high and scheduled to spike further in 90 days. And the uncertainty has most certainly already led to real economic damage.

However, the Wednesday-Thursday roller coaster is another valuable lesson in the impossibility of market timing and a good reminder to stay on course with your investment and financial plan.