Investors Should Remain Calm Amid Latest Tariff Tango

Eight days ago, US President Donald Trump took to Twitter to tell the world trade talks with China weren't moving fast enough, leading him to threaten to jack up tariffs on $200 billion in Chinese imports to 25%. He followed through on this threat Friday. Predictably, China responded with tariffs of its own Monday morning, as Chinese officials announced they would jack tariffs up on a range of about 5,000 US goods worth $60 billion from 5% ? 10% to 25%. Many now fear the tit-for-tat will continue, with Trump targeting the remaining $325 billion in Chinese imports. Already, the US Trade Representative's Office has filed preliminary paperwork to that effect. Pundits are apoplectic—and markets are rocky, with US stocks dropping about 2% in early trading Monday. But in our view, this reaction is too hasty. We think now is a time to stay above the fray and remain calm. In our view, these new tariffs—even including threats— likely lack the necessary scale to derail the bull. While recent swings haven't been fun, they aren't atypical for markets—even in terrific years.