Four steps that can help you navigate 2025's market downturn due to tariff turbulence

This year, tariffs have emerged as a significant wild card for global markets, creating unprecedented uncertainty that is impacting both businesses and consumers. This uncertainty is making it difficult for businesses to plan their spending and hiring, while consumers are pulling back on their spending. As a result, both consumer and corporate confidence have been dampened, fueling market volatility.

Though it is easier said than done, we encourage investors to remember that what’s in the headlines today doesn’t necessarily reflect the long-term outcomes you will achieve through a disciplined and well-diversified portfolio strategy.

The announcements on April 2 ("Liberation Day") provided some clarification, but the tariffs are higher and wider ranging than many people expected. These moves will push the average effective U.S. tariff to 20%–25%, a significant increase from 2.3% in 2024. This has led to a drop in stock prices and a rally in "safe haven" assets.

Currently, the U.S. government is sticking to its stance on tariffs, and it might take a while to finalize any deals with other countries. The implications of these tariffs could be significant, raising economic concerns and, likely, consumer prices. Tariffs act as a tax on consumers, reducing disposable income and spending. The uncertainty can also negatively impact business investment and activity, despite the intent of the policy to boost U.S. manufacturing.   As a result, investors should expect that market volatility could continue.

Our portfolio management team actively monitors the markets and economy and routinely makes tactical and other changes to manage risk and pursue opportunities. We seek to help you emerge stronger from any market downturn whether invested through our asset allocation products or enrolled in our advisory services.

T. Rowe Price U.S. equity funds¹ have consistently outperformed their respective benchmarks during both up and down markets. This performance is attributed to our rigorous research, prudent risk management, and deep experience in navigating market cycles.

It’s difficult to predict short-term market movements, and there are potential risks associated with frequently altering investment strategies based on market fluctuations. That’s why it’s important to align your asset allocation with your time horizon and goals, rather than reacting emotionally to market changes.

Here are four key ways investors can help protect their investment portfolios during periods of stock market volatility. 

To weather volatility over the long term, it’s important to have a financial plan and a diversified portfolio in place. If you don’t, it may benefit you to work with a financial professional to build a plan with your unique goals, risk tolerance, and time horizon in mind.

There are benefits to staying invested in equities, even during volatile times, due to the long-term growth potential of stocks. By focusing on your long-term goals and leveraging our expertise, we’ll continue to help you power through economic uncertainty.

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