March 10 - Market Commentary
Let’s try something different. Please read these two paragraphs:
1) President Trump's second term has been marked by an unprecedented surge in executive orders...
2) President Trump's decisive use of executive orders in his second term demonstrates his commitment to fulfilling his campaign promises...
If you’re like most Americans, you probably loved one of these paragraphs and disliked the other. They’re both factual — yet one is written with a left-leaning tone, and the other with a right-leaning tone. The information is the same. The editorial framing is not.
Now imagine waking up every day and consuming only information written in the style of Paragraph 1 or Paragraph 2. Over time, even without altering facts, bias naturally grows.
And yet our job as investors and advisors is to understand what’s really happening and make wise, data-driven decisions. So how do we strip away the noise?
By going straight to the data.
For this update, we’ll unpack the rapidly shifting topic of tariffs — what they are, why they matter, and how they are affecting markets.
Tariffs 101: Who’s on First? What’s on Second?
Forget everything you think you know about tariffs. Start fresh.
Imagine your country wants to build a new car industry, but neighboring countries are far better at producing cars. You have three options:
a) Let the market decide
b) Limit the number of cars imported (quotas)
c) Add a tax to imported cars (tariffs)
That's it. Those are the foundational tools of foreign trade.
Tariffs are not “good” or “bad.” They simply change incentives.
To illustrate, suppose:
Country 1 (Germany) manufactures cars
Country 2 (United States) imports them
A car costs $20,000 to import and is sold for $25,000 domestically.
If Country 2 imposes a 25% tariff, the importer now pays $25,000 instead of $20,000. They either:
Eat the cost (profits fall), or
Pass it on to the consumer (prices rise)
Most industries choose option 2.
Clear so far?
Tariffs, Tantrums & Trade Turmoil: A Timeline
The past several months have been busy — and chaotic:
Jan 14 – Trump announces the External Revenue Service to manage tariffs
Jan 26 – Trade tensions with Colombia resolved
Feb 1 – National emergency declared;
25% tariffs on Canada & Mexico
10% tariffs on China
10% tariffs on Canadian energy
Feb 3 – 25% Mexico/Canada tariff delayed
Feb 7 – Tariffs on low-value Chinese packages delayed
Feb 10 – Steel and aluminum tariffs postponed
March 4 – 25% tariff enacted on all imports from Canada & Mexico; +10% on China
March 6 – Partial one-month tariff pause
March 12 (expected) – 25% global tariff on steel + matching aluminum tariff
Markets are understandably confused — and nervous.
How Markets Are Reacting
On page 5 of the document, Chart 1 shows cumulative S&P 500 returns.
The pattern is clear:
When tariffs are announced → markets drop
When tariffs are paused/softened → markets rise
This makes sense. Tariffs increase costs, and higher costs generally mean:
a) Slower economic growth
b) More inflationary pressure
Markets dislike uncertainty — and uncertainty right now is high.
Tariffs: A Very Old Story
Tariffs feel chaotic today, but they’ve been a part of U.S. policy since the nation’s founding:
Tariff Act of 1789 – One of the first acts of Congress
Tariff of Abominations (1828) – Benefited Northern industries, hurt the South
Morrill Tariff (1861) – Helped fund the Union during the Civil War
Smoot-Hawley (1930) – Attempted (unsuccessfully) to protect farmers during the Depression
Tariffs have always been used. They’ve always caused friction. And markets have always adjusted.
Where We Are Now
Here’s what we know:
Tariffs are tools — not inherently good or bad
Tariffs raise costs and generally slow growth
Tariffs have been used for over 200 years
Markets are uneasy due to the speed and unpredictability of recent changes
In the short term? Expect volatility.
In the long term? Capital markets remain exceptionally resilient.
Free markets operate on timeless principles:
Savers allocate capital to productive companies that generate returns above inflation.
Tariffs may create noise, but they don’t change this fundamental truth.
We remain at your service and watching closely.
Daken J. Vanderburg, CFA
Chief Investment Officer
MassMutual Wealth Management