In recent weeks, we’ve seen a notable increase in market volatility fueled by evolving trade policy developments and broader geopolitical uncertainty. These events have prompted a number of thoughtful questions from clients who are understandably seeking clarity and reassurance.

As Fiduciary wealth advisors, we believe that open dialogue and evidence-based insight are essential—especially during times of disruption. In this Q&A, we’ve compiled and responded to some of the most common questions we’re hearing from our client community. Our goal is to provide context on what’s driving the current environment, and reinforce the importance of staying grounded in a disciplined, long-term plan.

As always, we are here to talk through your specific questions and adjust your strategy as needed—so you can continue to move forward with clarity and confidence.

Q: What does the 90-day tariff pause mean for markets?

A: On April 9, the White House announced a 90-day pause on reciprocal tariffs for countries that have not retaliated with higher tariffs on U.S. goods. Tariffs will continue at a 10% rate for these countries. There are a few key points to highlight:

• Notably, this excludes China which has imposed tariffs on U.S. goods, and the U.S. has escalated its tariff rate on Chinese goods to 145%.
• The initial market reaction to this news has been positive across all major indices, including some of the largest intra-day market moves since 2020.
• This is because the announcement signals the president is willing to negotiate and lower tariff rates, after a week of taking a hard-line stance on tariffs. This may mean that the escalating trade war that some investors fear is less likely.
• Despite this positive market move, it’s important to remain patient and maintain a longer-term perspective since the full impact of tariffs is still unknown. This is still a challenging environment for businesses to make investment and hiring decisions, and for consumers who could potentially face higher prices.

Q: What are the upside and downside scenarios of a trade war with China?

A: With new tariffs being implemented by both countries in April, we’re seeing immediate financial market reactions and adjustments to growth forecasts. Here are some key factors to consider:

• The escalation of tariffs has already triggered significant market volatility, with U.S. and other global markets all adjusting to reflect a changing economic backdrop.
• Markets are reacting to some of the worst-case scenarios. This would occur if the trade war continues for a long period of time, potentially leading to higher prices and weaker growth. This could also impact company profit margins by raising the cost of imported components and parts, and potentially reduce demand for their products. The fear of this scenario has led to an increase in recession probabilities.
• However, there are positive scenarios as well. For instance, the U.S. and China (and all other countries) could reach a trade deal that would reduce tariffs and drive greater economic activity. In 2018 and 2019, tariffs resulted in a trade deal between the U.S and China. A source of uncertainty is how far each country is willing to go in these negotiations.

Q: What are the implications of China owning U.S. Treasuries?

A: The U.S. and China are the largest economies in the world, which creates mutual economic dependencies that impact both countries, especially when trade tensions are running high like we’re currently experiencing. Here are some key points to consider:

• Retaliatory tariffs between the U.S. and China have escalated in April, with China increasing tariffs on U.S. imports from 34% to 84% and the U.S. raising tariffs on China to 104%, as of their start date on April 9. This has subsequently been to 145%.
• On April 9, President Trump announced tariffs will be paused for 90 days on non-retaliating countries, which excludes China.
• Some investors worry that China’s holdings of U.S. Treasury securities effectively finance our country and give them undue influence over our economy and policies. China’s holdings of U.S. Treasury securities represent about 2.1% of the U.S. government debt (according to the U.S. Treasury Department), which is significant but perhaps not as large as some might think. In fact, most U.S. Treasury securities are held domestically.
• If China were to significantly reduce its Treasury holdings, it could potentially cause short-term market volatility and temporarily push up U.S. interest rates. However, they can’t easily do this since they hold U.S. Treasury securities and the U.S. dollar for a reason: to stabilize their own currency and support their own trade and financial system.
• China has indicated in recent days that it is willing to devalue its currency somewhat. A lower currency can boost demand for a country’s goods and services, since they become cheaper in other currencies. However, doing so requires selling their currency and buying others, including the U.S. dollar.
• Historically, the U.S. dollar and Treasury securities have consistently maintained their “safe haven” status even during periods of tension – as demonstrated during the 2011 fiscal cliff when investors actually purchased more Treasuries following a credit rating downgrade.

In times like these, headlines can change quickly. We have seen over the past week, and even intra-day, how markets can have wild swings. Remember that market volatility is a normal part of investing and has historically stabilized once clarity arises. Maintaining a long-term perspective, and not overreacting to short-term movements, can help navigate these fluctuations. As always, it’s important to stay disciplined by sticking to a personalized financial plan, rather than react to day-to-day headlines.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party data which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Data and analytics provided by Clearnomics, Inc. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article.