Written on: 10/04/2025. Estimated 5-10mins read

Ah yes……Tariffs: The Buzzword That’s Stirring Up Markets

You know things are getting serious when local publications—and even our Prime Minister—are talking about tariffs in Parliament.

What are tariffs?

In simple terms, tariffs are taxes on imported goods. They make foreign products more expensive, which can impact both consumers and businesses alike.

📉 Why Do Tariffs Affect the Stock Market?

To understand this, we need to know what the stock market likes and dislikes.

✅ What the Stock Market Loves:

• Strong economic growth
• Predictability
• Low interest rates
• Low inflation

❌ What the Stock Market Hates:

• Weak economic growth
• Uncertainty
• High interest rates
• High inflation

Here’s a breakdown of how tariffs can trigger a market sell-off:

1. Higher business costs → Lower profit margins When companies pay more for imports, profits shrink, this is bad news for stock valuations.
2. Global uncertainty increases Tariffs often lead to trade wars (Think reciprocal tariffs between US and China causing uncertainty in the price of their goods). Fears of a global slowdown or “the R word” (recession) can cause investors to panic-sell.
3. Inflation pressures rise Companies often pass higher costs onto consumers, contributing to rising inflation.
4. Central banks respond with rate hikes To curb inflation, interest rates may rise. This makes borrowing more expensive, slowing growth, and reducing expected future earnings.

🇺🇸 If it’s all bad…..Why Introduce Tariffs at All?

From a policy perspective, the stated goals include:

• Bringing manufacturing jobs back to the U.S.

• Increasing government revenue

  Trump had five tariff goals - has he achieved any of them?

🛑 So… What do we do now? Buy? Sell?