A Rough Patch in the Market: Trump Tariffs and Lessons for the Long Haul

Hi everyone  🙌 ! It’s me again, back with some thoughts on the latest market turbulence shaking things up. If you’ve been watching the headlines—or your portfolio—lately, you’ve probably felt the sting of this recent rout. The talk of Trump tariffs is everywhere, stirring up fears of trade wars and economic fallout. Some are even drawing parallels to the Smoot-Hawley Tariff Act of 1930, that infamous piece of legislation that jacked up tariffs and, some argue, helped tip the world into the Great Depression. It’s a dramatic comparison, no doubt, and it’s got folks jittery. But as I sit here sipping my kopi and mulling it over, I can’t help but think: today’s world isn’t the 1930s. The economy’s a different beast now—bigger, more intricate, and woven with threads from emerging giants like China, India, Brazil, and our own Southeast Asia, alongside developed players like Japan, Korea, and Taiwan. So, let’s unpack this mess, see what it means for us as investors, and figure out how to navigate the storm.

Image Credit: https://www.bitget.com/news/detail/12560604677431

Smoot-Hawley vs. Today: A Different Game

First off, let’s talk about this Smoot-Hawley comparison. Back in 1930, the US slapped tariffs on over 20,000 imported goods, trying to protect local industries. What followed was a tit-for-tat retaliation from other countries, trade shriveled up, and—combined with a banking crisis and policy missteps—it arguably deepened the Great Depression. Scary stuff, right? But hold on a minute. Today’s economy isn’t that simple. Back then, global trade was a fraction of what it is now, and the US was a bigger fish in a smaller pond. Fast forward to 2025, and we’ve got a web of supply chains crisscrossing the globe, with emerging markets driving growth and developed economies leaning on tech and services. China’s not just a factory anymore—it’s a consumer powerhouse. India’s flexing its IT and manufacturing muscle. Even here in Singapore, we’re a hub linking East and West.

Sure, tariffs can still bite, but the impact won’t mirror 1930. The world’s too interconnected, and economies have more tools to cushion the blow. That said, don’t get me wrong—short-term pain is real. Trump’s latest tariff policy could hike costs on imports, spark inflation, and dent demand. Sectors like consumer discretionary are already feeling the heat. Big names like Apple, Nike, and Tesla, which rely on global supply chains and US sales, could see margins squeezed or demand soften if prices climb. Then there’s the export crowd—like Hong Kong-listed firms, Stella Holdings (01836), Wahsun Handbags (02683), Dream International (01126), and Crystal International (02232), where stock price has been beaten down after the announcement of tariff. These companies churn out consumer goods for the US market, and tariffs could hit their bottom lines hard. I’ve got some HKEX exposure in these sectors in my own portfolio, and I’m keeping an eye on how this plays out.

It is still too early or hard to quantify the impact of the Trump-Tariff at this point in time, as the Trump administration has also mentioned that it is subject to further negotiation. Nobody, even FED's strongest economist team, will be able to tell you the "real impact "; it will need to see more data coming in months later, and just mentioned " uncertainty around Trump administration policies and their economic effects remain high" in its latest FOMC statement.

Sector Hits and Broader Ripples.

The thing about tariffs is that they don’t hit everyone the same way. Consumer discretionary and export-driven businesses might take it on the chin, but domestic-focused firms—like utilities or healthcare—might shrug it off, at least initially. The problem is, if the overall economy sours and sentiment stays low, the pain can spread. A bad vibe in the market doesn’t care if you’re selling handbags to America or running a heartland kopitiam—confidence dips, spending slows, and even the “safe” sectors feel the drag. I’ve seen this before: a short-term shock turns into a longer slog if fear takes root.

But here’s the flip side—and it’s a big one. Governments and central banks aren’t sitting on their hands. The Fed, ECB, PBOC and even our MAS have levers to pull: interest rate cuts, stimulus packages, or liquidity injections (QE). Remember 2020? When COVID tanked markets, the Fed slashed rates to near zero and pumped money in like there was no tomorrow. It worked—markets bounced back faster than anyone expected. There’s a saying I like: “Don’t fight the Fed.” If Trump’s tariffs start breaking things, you can bet policymakers will step in to patch the cracks. It won’t be painless, but it’s a buffer we didn’t have in the 1930s.

Short-Term Chaos, Long-Term Opportunity

So, where does that leave us? In the short term, expect more choppiness. Markets hate uncertainty, and the new tariff policy is like tossing a stone into a calm pond—ripples everywhere. My portfolio’s taken a few knocks already, and I’m bracing for more. But for those of us playing the long game, this isn’t the end of the world—it’s a chance to get in the game. Warren Buffett’s got that famous line: “Be fearful when others are greedy, and greedy when others are fearful.” Right now, there’s plenty of fear out there. When I see “blood on the street,” as the old-timers say, I start looking for bargains.

This market rout isn’t just about tariffs, mind you. It’s a trigger, not the whole story. The US market’s been on a tear—up over 100% in the last five years, with the S&P 500 hitting all-time highs not long ago. That kind of run begs for a breather. I keep coming back to mean reversion—that pendulum swing I’ve talked about before. Markets don’t climb forever; they pull back to a level that makes sense with earnings, growth, and reality. Tariffs might’ve lit the fuse, but this correction was brewing anyway.

 For long-term investors, that’s not a disaster—it’s a reset. Valuations are starting to look better than they did a few months back when everything was priced to the moon.

Crisis and Opportunity: The Chinese Way

There’s this Chinese character for “crisis”—危机—that folks love to cite. It’s a combo of “danger” 危险 and “opportunity” 机会. 

 

Volatility like this is a double-edged sword. Yes, the market might keep sliding in the short term—could drop another 10% or more if tariff fears escalate. But for those with a system, it’s a golden window. I’ve always believed in buying in tranches—spreading out my purchases over time, especially when prices are wobbly. It’s like fishing: you don’t dump all your bait in one spot; you cast a few lines and see what bites.

Take my own approach. I’m eyeing some of those beaten-down, oversold companies or a solid exporter with a strong balance sheet that’s been unfairly punished. But I’m not jumping in blind. The companies I pick need to tick my boxes: good cash flow, low debt, and a track record of weathering storms. Speculating on penny stocks or hype plays? That’s not my game. The real risk isn’t a market dip; it’s the permanent loss of capital from betting on shaky ground.

Sticking to the Plan

So how do I ride this out? Same way I’ve always done it: stick to the portfolio mindset. My mix of Singapore Banks, REITs, HK industrials & conglomerate, and UK ( energy) dividend payers isn’t immune to this rout—some holdings are down 5-10% already. But the total picture? Still humming. Dividends keep rolling in, and I’m reinvesting the money that I don’t need in the short term. The market’s down, but my income stream’s holding steady. That’s the beauty of focusing on fundamentals over price swings. Volatility’s just noise; it’s the companies’ ability to pay dividends that keeps me sleeping at night.

<Image Credit: Michael Antonelli>

This is an interesting chart I took/borrowed from my friend ( Kyith)'s  Investment Moats TG. This chart, often shared in investing circles, captures a timeless truth about our emotions and market behavior. The left side, labeled "The Past," shows a jagged upward trend in light green, marked as "Missed Opportunities." It reflects how, looking back, we see markets climb despite volatility, yet our fears—driven by news, events, or uncertainty—kept us on the sidelines, missing out. The right side, in pink, labeled "The Future," is blank, tagged "Nothing But Risk." It highlights our tendency to view the future as unknown and pure danger, like today’s tariff worries, making us indecisive. Investing, though, is about probability, not certainty, and we need to balance the risks for long-term gains.

For you, I’d say this: have your own system. Maybe it’s a watchlist of quality stocks you’ve been eyeing, now at better prices. Maybe it’s a cash stash you’ve been holding for days like this. Whatever it is, don’t let the headlines dictate your moves. Buy when the valuation makes sense, not sell when the panic peaks. And don’t expect to nail the bottom—nobody does. I’ve been adding bit by bit over the years, and it’s served me well. My batting average isn’t 100%, but the winners outweigh the lemons.

Wrapping Up: Eyes on the Horizon

This Trump tariff saga’s got the market in a tizzy, no question. Short term, we’re in for a bumpy ride—inflation worries, weaker demand, and battered sectors like consumer discretionary and exporters. But it’s not Smoot-Hawley redux. The world’s too complex, too resilient, and policymakers have more tricks up their sleeves. For long-term investors, this is a hiccup, not a heart attack. Markets correct, revert to mean, and march on. The last five years spoiled us with gains; now’s the time to be patient and picky.

I’ll leave you with this: focus on the portfolio, not the panic. Build on strong foundations—cash flow, balance sheets, not hype. When others are running for the exits, that’s your cue to stroll in. I'm sure the market will continue to be volatile, so pace your buying, check your position sizing and do not buy into the "All-in" mindset.  Believe me, when you look back in 5 years' time, this ( current market rout) may just a small dip in long term chart, which you can't even notice or remember.

Happy investing ( hunting for value stocks ), and let’s keep walking this journey together!

Cheers!

STE