March 17, 2025

The buzz around tariff policies has been inescapable lately, with the Trump administration doubling down on its campaign promises to use tariffs as a tool to advance both economic and national security goals. From threats of hefty taxes on goods from Colombia, Mexico, and Canada to hints of further measures targeting the European Union, these policies are sending ripples through global markets.  At Omni 360 Advisors and Omni Wealth, we’re here to break down what this means for the economy—and, more importantly, for your portfolio.

What Are Tariffs, and How Do They Work?

A tariff is simply a tax slapped on goods imported into the U.S. When American companies buy from overseas—think retailers stocking shelves or manufacturers sourcing parts—they pay this duty to the federal government. On paper, the buyer foots the bill. But as Jason Blackwell, CFA, notes in his recent analysis for Focus Partners, the impact doesn’t stop there. Foreign sellers might slash prices to stay competitive, weakening their own currencies and making U.S. exports pricier abroad. More often, though, buyers pass the added cost onto consumers, nudging up prices at the checkout line.

Trade advocates argue tariffs give domestic producers a leg up by making foreign goods less competitive. History, however, paints a murkier picture. Blackwell points out that U.S. manufacturers often raise their own prices alongside tariffs, pocketing higher margins rather than passing savings to consumers.

Are Tariffs Inflationary? The Debate Heats Up

One of the biggest questions swirling around tariffs is whether they’ll spark inflation. Economists are split. A one-time price hike from tariffs—like the uptick in washing machine costs after tariffs hit in 2018—doesn’t necessarily spiral into sustained inflation, which is what really worries the Federal Reserve. The Wall Street Journal has highlighted how such price jumps often fade as broader market trends take over. Yet, if tariff escalations pile up, those “one-time” increases could start looking a lot like persistent inflation. As Blackwell warns, this might force the Fed to rethink its interest rate strategy—potentially pausing cuts or even hiking rates to cool things down.

The New York Times adds another layer, noting that tariffs aren’t just about economics—they’re a policy choice with competing goals. The Trump administration sees them as a revenue source and a way to revive domestic manufacturing, but these aims can clash. Higher costs could dampen consumer spending, slowing growth even as they aim to protect jobs.

The Economic Ripple Effect

The economic fallout hinges on how long tariffs stick around and how trading partners respond. Goldman Sachs, cited in both Blackwell’s piece and recent Wall Street Journal reporting, estimates that every five-percentage-point tariff hike could trim S&P 500 earnings per share by 1-2%. That’s a direct hit to corporate profits, especially for companies reliant on global supply chains. Add in retaliatory tariffs—like Canada’s response, detailed in the New York Times—and the picture gets messier, with higher costs and disrupted trade flows potentially dragging on GDP.

But it’s not all doom and gloom. The administration’s broader agenda, including lower corporate taxes and deregulation, could cushion some of these blows. As Blackwell suggests, these measures might offset trade-related pressures, creating a mixed bag for the economy.

What Does This Mean for Your Portfolio?

For investors, tariffs are a double-edged sword. Companies tied to global trade—think big multinationals—face risks from rising input costs and weaker overseas demand. The Wall Street Journal recently noted Wall Street’s growing unease over earnings hits and inflation pressures, with markets whipsawing as tariff news unfolds. Goldman Sachs predicts a 2-3% S&P 500 earnings drop if tariffs on Mexico, Canada, and China fully kick in.

On the flip side, smaller, U.S.-focused firms—especially in industrials—could shine. Less exposed to trade wars, these companies might even benefit from tax cuts, turning tariff turbulence into an opportunity. Blackwell’s advice aligns here: favoring domestic producers could be a smart play in this environment.

 Navigating Uncertainty with Omni 360 Advisors

The on-again, off-again tariff saga is a reminder that economic policy is never straightforward. Markets may swing with each headline, but at Omni 360 Advisors and Omni Wealth, we’re focused on the long game. We’re watching how these policies unfold and adjusting strategies to protect and grow your wealth—whether that means leaning into domestic opportunities or hedging against global risks.

Feeling uneasy about how tariffs might ripple through your financial plan? You don’t have to navigate this alone. Reach out to Omni 360 Advisors today. Let’s discuss how these shifts could impact your portfolio and ensure your financial well-being stays on track, no matter what the headlines say.

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