It’s Really Not Worth Panicking Over

And just like that, President Trump’s tariffs are paused yet again.

On April 2, he announced his global tariffs plan. About a week later, he paused almost all of them for a 90-day negotiation period.

The markets, which had plummeted almost 15%, went on to rebound spectacularly.

That left just Trump and China battling each other, throwing new fees and fines on each other’s exports. Then, on May 14, they reached an agreement to start negotiating.

The markets, which had been worrying over the tension, rejoiced.

This past Friday, Trump turned his attention to the European Union (“EU”), posting this on Truth Social:

The European Union, which was formed for the primary purpose of taking advantage of the United States on TRADE, has been very difficult to deal with. Their powerful Trade Barriers, Vat Taxes, ridiculous Corporate Penalties, Non-Monetary Trade Barriers, Monetary Manipulations, unfair and unjustified lawsuits against American Companies, and more, have led to a Trade Deficit with the U.S. of more than $250,000,000 a year, a number which is totally unacceptable. Our discussions with them are going nowhere! Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025. There is no Tariff if the product is built or manufactured in the United States. Thank you for your attention to this matter!

And so, the markets fell again, though not as much as they could have. Perhaps they’re beginning to learn?

Trump seems more than willing to keep the lessons coming regardless. Yesterday, after further discussion with the EU, he agreed to maintain the initial July 9 pause… sending stocks up once again.

A pattern is forming. And I’m not talking about the presidential pattern of using tariffs as an effective “motivational” tool.

I mean that for all the volatility, for all the headlines, markets have hung in there. The S&P 500 is about even on the year as I write. That’s why, through the past few months, our message has been the same. Find great companies… and stay the course.

If we can just remember that, we can save ourselves a lot of angst and money by refusing to participate in the panic.

The Art of Not Overreacting

Let’s face it: Donald J. Trump is very good at getting attention. You could even say he excels at it.

So, when he posted his rant about the EU early on Friday morning, he meant to make an impact. Which is precisely what he did.

Everyone was talking about it on both financial and non-financial platforms. Off of them too, as I found out directly.

I had planned a round of meetings late last week, including with two very high-net-worth investors. We were supposed to discuss certain business opportunities, and I wanted to pick their brains about several other topics as well.

But both of them also had opinions on Trump’s latest tariff statements. And both of them made those opinions very clear.

One of the gentlemen in question was extremely impressed with what’s going on. He believes the president is doing what’s necessary: that there really has been an enormous and intentional trade imbalance enacted against the U.S. for decades.

In his mind, past presidents – both Democrat and Republican – haven’t done their duty in protecting the country. So, he’s feeling good about the future… even if he isn’t necessarily enjoying the road to get there.

The other man, meanwhile, has significant connections and investments in Mexico. So, it should come as no surprise that he was unimpressed with how Trump is affecting international trade.

But neither of them considered the tariff drama a reason to run for the hills.

They haven’t sold their holdings. They didn’t cancel our appointments. And we didn’t spend the whole time fixating on what Donald Trump did or might do still.

The tariffs came up as a topic. Then we moved on to discussing the profitable opportunities we’d intended to all along.

Because there are still opportunities out there if you’re only willing and able to stay calm.

It Isn’t Different This Time

It might be more difficult to make decisions under all the stress and distraction Trump’s tariffs have provided. I’ll be the first person to acknowledge that.

I just hope you’ll acknowledge that it’s not still impossible to keep a level head.

And it helps to hold a diverse range of quality stocks that you purchased at discounted valuations – the type of portfolio we spent years crafting for our Wide Moat Letter. That kind of portfolio should see you through every single time. After all, it did during:

• Black Monday, where the Dow Jones dropped 22.6% in a single day

• The dot-com bubble bursting in 2000

• The 9/11 meltdown in 2001

• The financial crash of 2008

• The Covid-19 shutdowns in 2020

• The interest rate nonsense we’ve seen over the past four years

And, I have to point out, it also applied to all the tariff drama that went down the last time Trump was president.

You could argue that this time is different. Many people are, hence the market drops we’ve seen these past few months.

And in the market’s defense, it is reacting to new, dramatic information. As my one contacts pointed out last week, no other U.S. president in our lifetime has tackled trade the way Trump is this time around.

There’s no politicking going on. No gentle negotiations or diplomacy. For better or worse, it seems as if Trump is throwing his entire agenda at the entire world all at once.

So, who knows? Maybe the solution really is to sell everything and stay out of the stock market until things settle down again. Maybe Trump’s tariffs really are the ultimate unwinnable investor complication (even though they haven’t been so far).

But I wouldn’t bet on it. My advice remains the same.

Remain calm. Read the news, but don’t overreact to it. Assess your holdings and potential holdings rationally. You’d be amazed what high-quality companies can operate through.

And, ultimately, it’s really just not worth panicking over.

Regards,

Brad Thomas
Editor, Wide Moat Daily

P.S. Right now, I’m planning out my trip to New York City next week, where I’ll be attending the annual REITweek conference… as well as meeting with a very well-known billionaire. Stay tuned for the details as they play out here at Wide Moat Research.