Investing in a Tariffed World: Market Impacts and Investment Strategies

As we wrapped up our fourth and final webinar in the 2025 series, I was particularly excited to host Mitch York and Josh Cohen from Atlantic Union Bank for what turned out to be a fascinating discussion on "Investing in a Tariffed World." This topic has been generating significant attention in financial circles, and I wanted to share some key insights from their presentation. 

Understanding Tariffs: The Basics 

Before diving into investment implications, Mitch and Josh started with some eye-opening questions that revealed how much confusion exists around tariffs. Here are some surprising facts that emerged: 

Who actually pays tariffs? Despite common misconceptions, it's the domestic importer (think companies like Walmart) that remits tariff payments to the U.S. Treasury, not foreign countries or exporters. 

How much do we actually import? While media coverage might suggest we import everything, only about 15% of goods consumed in the U.S. are actually imported. When you walk into a Walmart, 80-90% of products on shelves may be imported, but across the entire economy, it's much lower. 

Tariff revenue significance: In 2024, tariffs represented only about 2% of total U.S. Treasury collections - roughly $86.5 billion out of $4.9 trillion in total revenue. 

The Many Faces of Tariffs 

Josh provided an excellent framework for understanding how different constituencies view tariffs: 

• Foreign producers see tariffs as demand constraints that increase prices and create uncertainty 

• Domestic importers face increased costs of doing business and difficult decisions about passing costs to consumers 

• Domestic producers benefit from protection against foreign competition 

• Government uses tariffs as a revenue source and negotiating tool 

• Consumers bear the brunt through potentially higher prices and fewer choices 

Market Reactions: Storm in a Teacup? 

What struck me most about Mitch's analysis was his characterization of the market reaction as a "storm in a teacup." Despite all the media attention and initial uncertainty around what they called "Liberation Day," the actual market impacts were more muted than expected: 

U.S. Dollar: While the dollar weakened about 8-9% following tariff announcements, it remains historically strong compared to 15 years ago. 

Interest Rates: The 10-year Treasury yield saw only a modest uptick around Liberation Day, nothing like the dramatic moves we've seen during other economic events. 

Credit Spreads: Perhaps most telling, credit spreads - which Mitch calls a "fear gauge" - barely moved, suggesting markets weren't pricing in real economic panic. 

Equity Markets: The S&P 500 did experience a significant 19% drawdown, with some tech stocks falling 25% or more. However, we saw a surprising V-shaped recovery as markets absorbed the actual tariff information and realized the economic impact might be less severe than initially feared. 

Bull vs. Bear Case for Stocks 

The presentation's bull-bear debate was particularly enlightening: 

The Bull Case (Mitch's optimistic view): 

• Tariffs will drive onshoring and domestic investment 

• Tariff revenue supports government spending without tax increases 

• Other forces (AI, fiscal policy, monetary policy) are more powerful than tariffs 

• Peak tariff uncertainty is behind us 

The Bear Case (Josh's cautionary perspective): 

• Tariffs are taxes that reduce economic activity and increase prices 

• Trade wars could weaken the dollar and reduce investment capital 

• Inflationary pressures could lead to higher interest rates 

• De-globalization reduces labor productivity 

The Investment Playbook 

Perhaps most practically, they outlined a clear investment strategy for navigating tariff uncertainty: 

1. Know your shopping list - Identify quality stocks that become attractively priced during volatility 

1. Marginally increase equity allocation when drawdowns occur 

1. Take advantage of wider credit spreads in the bond market 

1. Consider foreign equity exposure given better valuations and different monetary policy cycles 

Looking Forward 

As we concluded the session, polling our audience about future expectations, it was clear that while tariffs remain a concern, most participants expect them to rank as a "medium" to "low" investor concern a year from now. This aligns with Mitch and Josh's view that markets have largely moved past peak tariff uncertainty. 

The key takeaway from this excellent presentation was that successful investing during uncertain times requires planning rather than prediction. Having a clear strategy and shopping list ready for when volatility creates opportunities is far more valuable than trying to predict exactly what will happen with trade policy. 

I want to thank Mitch and Josh for sharing their expertise with our group. Their combination of data-driven analysis and practical investment wisdom provided exactly the kind of insights our webinar series aims to deliver. As always, while no one knows exactly what the future holds, having a well-thought-out strategy and maintaining a long-term perspective remains the best approach for navigating uncertain markets.