President Donald Trump’s tariff announcements have shocked markets since April 2^nd, with equity markets falling nearly 15% from peak, then posting gains on April 9^th with the announcement of a 90-day tariff suspension. The following headlines are reminders that trading through volatility is extremely hard and feels like a rollercoaster:

• April 4 (Reuters) – “S&P 500 loses $5 trillion in two days in Trump tariff selloff”[1]
• April 9 (The Wall Street Journal) – “Nasdaq Soars to Best Day Since 2001 After Trump Pauses Some Tariffs”[2]

Although writing about US policy in 2025 risks being out of date by the time one has finished, we still want to provide some thoughts on these events, step out of the short-term noise, and provide a long-term perspective.

First, institutional investors enter this period of uncertainty with a financially strong and healthy position.

• Most pension plans are well funded with more assets than actuaries estimate are required to pay pensions. For endowments, asset growth has been strong and outpaced inflation.
• Asset owners have enjoyed exceptional equity market returns over the last two years.
• Longer-term bond yields have remained higher than in the 2010s, reducing the cost of liabilities or funding for pension, healthcare benefits or long-term spending plans.

That said, there is no room for complacency. In our client communications, we have drawn attention to several longer-term themes and risks:

• It is not just President Trump: fiscal and inflationary pressures, strategic competition with China, technological competition (for example, Artificial Intelligence technology is a strategic capability the United States need) mean that tariffs are likely to be used more as a policy tool than they have been in the recent past.
• The last 30 years were marked by rising globalization and low trade barriers, resulting in a period of historically low tariffs. For much of its history, the US has had higher tariffs than in the last 30 years.
• The impact of tariffs is complex. Economic impacts will depend on who is applying the tariffs, how much the tariffs are, what is being tariffed, and what policy purpose the tariffs serve.

At PBI, we have looked at tariffs and trade policy, noting that their impacts are unpredictable and intertwined with inflation, interest rates, and economic growth. In fact, some scenarios show tariffs could lead to short-term inflation spikes, while others show deflationary outcomes and even relative benefits for Canada. We think these themes remain relevant today. All that to say, the path forward is not linear and not easy to forecast.

“Change is the only constant,” an ancient Greek philosopher said. We have worked with clients to conduct an annual exercise of reviewing and updating capital market assumptions to reflect economic shifts; we also run stress and scenario tests on client portfolios and projections, which consider events like this month. Clients have put in the work to make sure long-term objectives remain valid despite short-term noise.

We will continue to monitor developments and share updates as needed.

[1] https://www.reuters.com/markets/global-markets-wrapup-1-2025-04-04/

[2] https://www.wsj.com/livecoverage/stock-market-trump-tariffs-trade-war-04-09-25