Is anyone feeling liberated from last week’s tariff announcements? Neither are we. Most investors have felt the full emotional spectrum: from anger to anguish to outright puzzlement. But the reality is setting in. Trump has taken a wrecking ball to longstanding alliances and the US-led post-war world order. The world now faces a prolonged and strategic restructuring. 

How should investors respond? With a quarter century observing markets, this CIO has learned a fundamental truth: while every market decline is different, they all follow the same pattern. Emotions take over, fear drives the narrative and markets fixate on worst-case scenarios. 

But fear is rarely the best advisor. Here are our key insights on navigating the current tariff turmoil:

Stay Alert: We have been expecting this.

This latest disruption hasn’t caught us entirely off guard. Since Trump’s election, we’ve consistently communicated a clear message—through podcasts, videos, and research publications: America stands to lose the most in a global trade war (see examples here, here and here). The outsized performance of US equities over the past decade was built on the perception that America was a stable, rules-based environment for business. But recent policy chaos has shattered that assumption. Increasingly, global investors are viewing American assets not as a source of return—but as a source of risk.

Entering the year, Wall Street largely ignored this risk, betting that tax cuts and deregulation would outweigh any protectionist lurch. That was a precarious stance—especially with US equities making up nearly two-thirds of the world’s investable market. Such concentration introduced serious vulnerability.

Our investment team has already taken decisive steps: reducing exposure to US equities, particularly among the richly-valued “Magnificent 7,” and extending duration in US bond holdings to hedge against a slowing domestic economy. Looking ahead, expect further shifts in market dynamics. The past decade’s correlations are breaking down. Leadership is changing. Last week, the US dollar—typically a safe-haven during market stress—declined against a basket of global currencies. That’s not a fluke. It’s a signal.

Stay Diversified: Volatility will define this year.

Markets despise uncertainty. Yet they crave confident forecasts—however misplaced. There’s never a shortage of pundits claiming to have a crystal-clear view of the future. But today’s reality is clear: the world is entering a period of elevated and prolonged unpredictability. Trade wars are messy, tariffs are blunt instruments, and unintended consequences are the norm, not the exception. Now is not the time to bet on whether the President wakes up on the right side of the bed.

In turbulent times, diversification becomes not just important—it becomes essential. Yet many investors have lost sight of what true diversification means. Recent years have punished those who strayed from the narrow path of US-centric investing. America was a one-way trade. Why diversify when one country seemed to deliver all the returns?

But that illusion is breaking down. Today’s environment demands genuine global diversification—across geographies, sectors, and asset classes. Yet most portfolios remain dangerously concentrated, particularly in overvalued US technology stocks. Think of global diversification as financial Kevlar. It may dampen some upside in the good times. But its real value lies in protecting against serious drawdowns. Never take the Kevlar off.

Stay Invested: Emotions are running high but opportunity is coming.

Fears of a deglobalizing world are intensifying. But investors should recognize that upside scenarios remain firmly in play. Trump’s weakness? He’s a deal junkie. In the coming days and months, expect negotiations—whether with friendly Asian economies like Japan and South Korea or with geopolitical rivals like China. Few things seem to bring Trump more joy than announcing a “tremendous” deal.

Beyond politics, consider the resilience of the global economy. While the US remains the world’s largest economy, its share of global goods imports has shrunk to 13%—down from nearly 20% two decades ago. It remains a major player, but no longer the primary driver of global trade growth. That role now belongs to Europe and, more recently, China—both of which remain committed to advancing free trade.

And forget comparisons to the 1930s. The world has changed. The US now commands a far smaller share of global GDP, and the perils of protectionism are well understood. Just as Trump’s policies have fueled a surge in Canadian patriotism and sparked a geopolitical and fiscal awakening among Chinese and European leaders, his tariffs are more likely to serve as a cautionary tale for other governments than a model to emulate. Over both the short and medium term, the economic forces driving globalization remain formidable, ensuring its resilience and staying power.

Stay alert, stay diversified, and stay invested.

It’s never too late to strengthen portfolio resilience. Forstrong’s globally diversified strategies are designed to navigate shifting trade realities—safeguarding capital while positioning for the opportunities ahead.

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