Navigating Trade Policy Shifts: Turning Market Lemons into Long-Term Lemonade

Current Events

Navigating Trade Policy Shifts: Turning Market Lemons into Long-Term Lemonade

April 7, 2025

As anyone who has poked their heads up above the spring flowers (and pollen) knows, this past week has brought significant changes to U.S. trade policy. The Trump administration announced a 10% global tariff (effective April 5) and reciprocal tariffs of 11–50% on 57 countries (effective April 9). While these measures supposedly aim to rebalance trade relationships, they have injected near-term volatility into markets (some pretty-ugly springtime weeds).

At BluHawk Wealth, we understand the uncertainty this creates, and we want to assure you: we are navigating these shifts alongside you with the same strategies we recommend for your portfolio, as we “eat our own cooking” at BHWM. We are eager to engage as needed to inform, support, and act prudently on a client-by-client basis.

It is important to note that our (BHWM) view of the current administration’s policy initiatives, the ultimate goal is for The United States to become increasingly (at a rapid pace) strategically self-sufficient, not gradually so. Considering this and depending on the resolve of the current administration (and that of the American people), there is a meaningful probability that economic volatility, in addition to volatility for the investment markets, may continue in the intermediate term.

Furthermore, as history has proven (and, by the way, history does not repeat exactly, but rather rhymes with the future), markets will head down (as they are now) ahead of future economic disruption, whether perceived or actual. On the other hand, the markets have historically snapped back with a sharp upward trend in risk asset prices ahead of the subsequent recovery in either perceptions, or actual economic damage. Of course historical market action/performance is no guarantee of the future.

For the above reasons, during the many meetings that we have with all of the BHWM current engaged clients, it is very important to take very seriously our discussion of the balance desired by you between risk and opportunity and how your portfolio is currently invested and aligned with those desires.

Current Trade Policy Landscape

Tariff Details:

A 10% baseline tariff applies to all imports starting April 5.
57 countries face higher tariffs (11–50%) due to “nonreciprocal trade practices,” effective April 9.
Exemptions include USMCA-compliant goods, pharmaceuticals, and critical minerals.

Market Impact:

Volatility is likely to continue as industries adjust to new costs and retaliatory measures continue to emerge.
Long-term outcomes depend on negotiations, but opportunities almost certainly exist and will very likely emerge for disciplined and patient investors. Many of you have heard us say in the past that although the market may overreact, in both directions at times, “it is very efficient at taking money from the less patient investor and giving it to the patient investor.”

Turning Lemons into Lemonade: Proactive Strategies

While tariffs may feel like a sour surprise, we see three actionable paths to optimize portfolios:

1. Upgrade Portfolios with Discounted High-Quality Shares

Many fundamentally strong companies are trading at discounted valuations due to market overreactions.

2. Realign for Tax Efficiency

Tax-Loss Harvesting: Offset capital gains by selling off some under-performing assets and reinvesting in similar opportunities with potential for a strong rebound.
Roth Conversions: Consider moving tax-deferred assets into Roth accounts while markets are lower, locking in tax-free growth ahead of potential rate changes.
Asset Location: Shift investments to other types of tax-advantaged accounts depending upon your unique needs and circumstances.

Your Options in This Environment

We invite you to reflect on your priorities and reach out if you’d like to engage with us on any of these ideas. We’ll guide you in determining what, if any, of these are appropriate given your specific situation and needs:

Stay the Course: Maintain a long-term perspective, trusting in diversified portfolios to recover.
Raise Cash: Build liquidity reserves if anticipating unplanned near-term expenses or further volatility (not ideal).
Go Opportunistic: Lean into undervalued sectors or tax-advantaged investment repositioning.