Authored by: Nicholas M. Brown, CFA, CFP
In recent weeks, the conversation dominating the financial headlines has centered on tariffs—and whether or not they will ultimately be implemented. Initially perceived by many as a tactical move—a bargaining chip in the administration’s broader agenda, which includes border security, trade rebalancing, and domestic manufacturing support—tariffs have quickly become a source of market volatility and investor concern. What began as posturing has now become a more opaque and unpredictable policy direction, with ramifications that extend far beyond bilateral negotiations.
From a wealth management perspective, the issue is not merely whether tariffs will take effect, but rather how the surrounding uncertainty is eroding confidence, clouding projections, and ultimately tightening conditions in the capital markets. Investors, business owners, and financial planners are all being forced to contend with a new set of unknowns—ones that are layered atop an already complex economic environment shaped by deliberate policy tightening.
The Two Unknowns Shaping the Tariff Debate
There are two critical variables that have yet to be resolved, both of which are contributing to the heightened uncertainty in equity markets.
The first is geopolitical: Will foreign governments force the United States to enact tariffs by refusing to negotiate, or will they make sufficient concessions to avoid them? This question is not just a matter of political theory—it has direct consequences for global trade flows, supply chain strategies, and the profit margins of companies operating internationally. For example, the longer negotiations remain unresolved, the more pressure U.S. importers face in deciding whether to pass on costs, absorb them, or reconfigure their sourcing strategies.
The second issue is domestic and procedural: The policy itself is fluid, changing often enough that it has become nearly impossible for businesses to plan with any degree of confidence. One day, certain goods are in scope; the next, they are exempt. The lack of clarity is arguably more damaging than the tariffs themselves. For importers and manufacturers, strategic decisions like rerouting goods or adjusting pricing models require stability and foresight—neither of which is available in the current environment.
This constant fluctuation prevents companies from taking proactive measures to mitigate impact, making each trading day subject to fresh waves of speculation and repositioning. The net result? A market environment characterized by greater volatility, compressed risk premiums, and reactive behavior—conditions that sophisticated investors seek to avoid, not embrace.
Tariffs and the Inevitable Inflation Narrative
It’s important to acknowledge the economic intention behind tariffs: they are designed to raise prices. That’s not a side effect—it’s the goal. By increasing the cost of foreign goods, the policy aims to make domestic alternatives more attractive, theoretically boosting local industries. But that price increase is inflation by another name, and given the painful memories of inflation’s recent return, few investors are enthusiastic about policies that intentionally reignite those flames.
In fact, the broader investment community—especially those with long-term wealth preservation in mind—has become increasingly wary of inflation. After all, inflation erodes purchasing power, reduces real returns, and introduces distortion into financial projections. For families and business owners navigating complex financial landscapes, reintroducing inflationary pressure as a policy tool presents both strategic and emotional challenges.
We are reminded here that policy does not operate in a vacuum. Market reactions are often shaped not just by outcomes, but by the directionality and intent behind those outcomes. When the stated aim is to raise prices, the natural response from investors is caution—especially in an environment where capital is already becoming more expensive.
The Quiet Force of Monetary Tightening
While tariffs are the headline, there’s a quieter but equally impactful story unfolding behind the scenes—one that relates to monetary policy and liquidity. Today, we face a convergence of three deliberate actions that together amount to a tightening of the money supply:
- The Federal Reserve is continuing to reduce its balance sheet. This quantitative tightening effectively removes liquidity from the system, reducing the pool of capital available for lending, investment, and speculation.
- Interest rates remain elevated. While the Fed has signaled some willingness to adjust rates in the future, current levels are still well above the accommodative stance that fueled previous market expansions. High rates make borrowing costlier and discourage speculative activity.
- The federal government is actively pursuing spending cuts. These reductions in fiscal stimulus are designed to rein in deficits but also reduce the velocity of money within the economy—an indirect but powerful form of capital restraint.
Each of these factors alone might be manageable, but their combination creates a more challenging environment. When liquidity dries up, risk assets suffer. That is, in part, why we see a divergence in returns between U.S. equities and their international or emerging market counterparts. In many global markets, policy remains more accommodative, fiscal support continues, and inflation is more contained. As a result, investors may perceive better value or more attractive growth dynamics outside the U.S., at least in the short term.
Navigating the Complexity: A Case for Strategic Planning
So where does this leave investors—particularly high net worth individuals, business owners, and families who are looking for long-term solutions in an increasingly short-term focused world?
At Granite Harbor Advisors, we believe that this kind of complexity requires more than reactionary thinking. It calls for a coordinated, deliberate approach that aligns public and private investment opportunities, incorporates scenario-based planning, and recognizes that not every lever is within our control—but many are.
For those seeking to maintain confidence in their financial strategy during times of market uncertainty, there are a few prudent steps to consider:
- Evaluate global equity diversification. After years of broadly lagging the US markets, we have seen a divergence between U.S. and international or emerging markets in the first part of the year. For investors who have tilted away from global diversification, now may be an appropriate time to consider reallocating a portion of equity exposure abroad in an effort to provide additional resilience.
- Implement asset-liability matching using fixed income. Building a bond ladder to cover anticipated withdrawals over the next five or more years can provide greater certainty and reduce the need to liquidate equities during periods of volatility. Securing future withdrawal needs now at relatively higher interest rates than we have seen in previous years can potentially help investors navigate through a volatile market with less emotional and financial stress.
- Explore alternative asset strategies. In certain cases, incorporating annuities or structured options can help hedge against overall market exposure while still generating the income or downside protection needed for long-term goals.
These steps are not one-size-fits-all solutions. They require careful evaluation of an investors circumstances, goals, and risk tolerance. But they represent the kind of thoughtful, measured adjustments that can help investors stay aligned with their financial plan even when external conditions are unpredictable.
When policies shift quickly, and liquidity tightens across the board, having access to sophisticated financial solutions—such as private market investments, estate planning tools, and advanced insurance strategies—can offer both stability and flexibility. Our role is to help clients maintain focus amid the noise, ensuring that their plans continue to serve their broader goals even when the headlines are unsettling.
Final Thoughts
The current environment is undeniably challenging. Policy inconsistency, inflation risk, and tightening monetary conditions each contribute to a more fragile and reactive market. Yet, within that fragility lies an opportunity—the chance to reassess assumptions, reinforce planning structures, and make thoughtful adjustments that reflect not just where we are, but where we might be headed.
The most successful investors in uncertain times are not those who predict the future perfectly, but those who prepare for a range of outcomes with discipline, humility, and the right partners at their side. We aim to be exactly that kind of partner. Contact us today to see how we can help.