First Quarter 2025 Review

Leading up to the April 2 “Liberation Day” announcement, markets had become accustomed to a tariff playbook: very aggressive posturing followed by more moderate policies.

What markets got instead was a very negative surprise.

All told, the U.S.’s new projected tariff rate of ~26% blew past the worst-case projections on Wall Street, even surpassing the Smoot-Hawley tariff levels of the 1930s. The market response was a sharp selloff.

Tariff policy has moderated since, with a 90-day pause on “reciprocal tariffs,” but with trade tensions between the U.S. and China ratcheting higher. In terms of portfolio positioning, we think incremental caution is warranted, but we also remain steadfast in owning a portfolio of high-quality companies with strong fundamentals—combined with appropriate income-generating and principal-protected securities for a measure of liquidity and safety.