Navigating the 2025 Tariffs
A lot has happened, economically speaking, in the last few days.
Hilltop’s Investment Committee met on Monday, April 7 to assess the market shifts that happened rapidly at the end of last week and we’d like to share some important updates with you.
Did you read our Q1 Market Recap post from last week? If not, you should.
First, we’ll cover the background in more detail so that we’re on the same page, and then we’ll outline our strategy for moving forward.
If you didn’t see Thursday’s news about President Trump enacting sweeping tariffs, you’ve certainly seen headlines about the markets’ response to it. As of the close of markets on Friday, April 4, that response has been decisively negative. The stories and concerns were similar across the globe.
As we know, one of the things markets dislike most is the unknown.
While the concept of tariffs wasn’t a surprise—President Trump has been promising them since his campaign—the specifics remained unclear. Lately he has been pushing reciprocal tariffs on countries who have tariffs against the U.S., but until Thursday, the details were vague.
The markets reacted sharply to the uncertainty, but the White House framed this move quite differently. They've called it “Liberation Day,” describing the tariffs as part of an effort to free the U.S. from what it considers unfair trade relationships—a continued push under President Trump’s “America First” agenda.
Despite weeks of speculation, this announcement seems to have caught many investors off guard. But more than the surprise itself, it’s the future unknowns that continue to drive the markets. Other countries are already promising to push back, either with tariffs of their own or attempts to negotiate themselves into better positions—so we may continue to see some flux ahead.
UPDATE [Posted April 11]: There have indeed been more fluctuations in the market with new announcements from the Trump Administration on April 9 highlighting a 90 Day Pause with ongoing clarifications in the subsequent days, as well as domestic and international market reactions. Developments are unfolding quickly, and we will continue to be vigilant in offering strategic recommendations to our clients.
While some economic pain may result from this growing trade war, any kind of known quantity is more likely to bring stability than prolonged uncertainty. And history supports that idea: something unexpected sparks short-term panic, but once the dust settles, markets tend to level out again.
Uncertainty in the market is not a surprise to us at Hilltop Wealth Advisors, it’s an expected part of the process. We’ve built the financial plans and investment strategies of our clients with times like these in mind.
Hilltop’s Investment Committee has prepared an action plan to help take advantage of the different opportunities presented by these market shifts. This plan includes ideas like:
Tax-loss harvesting: We intentionally sell positions with losses in taxable accounts in order to offset gains, effectively reducing taxable income. We then replace the positions sold with new positions that have a similar or more desirable investment profile.
Rebalancing accounts: Bonds, hedged positions, and value stocks have fared much better than other positions in the portfolio. Rebalancing portfolios back to their target allocation is a great way to take profits from better performing asset classes and add to areas of the portfolio with larger discounts.
In addition, we plan to reach out to clients who may benefit from additional strategies like:
Completing Roth conversions: Converting pre-tax IRA assets to a Roth IRA is another strategy that can be beneficial during market declines. Investment growth in a Roth IRA is generally tax-free, so doing a Roth conversion (or making a Roth IRA contribution, if eligible) while markets are at a lower level can mean that a subsequent market rebound could help maximize tax-free assets.
Investing excess cash: For those who have more cash than needed to cover their expenses in the next year or two, it may be advantageous to consider investing those funds.
We have helped individuals weather global financial crises and countless personal life events since 1989. We provide financial planning and investment management services as an independent, fee-only, fiduciary firm.
Later this month, the Hilltop Investment Committee will meet again for our quarterly multi-day review of the economic and market environment.
And as always, if you have questions or concerns about your investments, don’t hesitate to connect with our team. We are here to help.
We want to help you make wise decisions with confidence and live the life of your dreams. If you’re looking for a proactive financial partner who will listen to you, reach out.
This material is provided as a courtesy and for educational purposes only. Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.