As of August 4, the current President of the United States, Donald Trump, has placed tariffs on 60 key trading partners, citing inadequate enforcement of bans on goods made with forced labor. Because tariffs raise import prices and tend to weaken the U.S. dollar, businesses reliant on foreign goods often pass these higher costs to consumers, which can fuel inflation and create uncertainty among investors.

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Given the president’s tendency to use tariffs aggressively, investors may want to review how these trade policies could affect their portfolios in both the near and long term, according to the source article.

What to avoid

Reacting impulsively to market shifts rarely leads to gains. If a portfolio consists of companies that have been thoroughly researched and are trusted, there is little reason to abandon them. Historically, staying invested in a diversified portfolio over an extended period has yielded better results than frequent trading based on short-term market moves. While current tariffs may hurt some holdings, longer holding periods tend to smooth out volatile stretches.

Changes may not be necessary simply because of the types of assets held. For instance, investors with exposure to U.S.-based supply chains, consumer staples, healthcare, or utilities may have actually benefited from tariffs due to reduced foreign competition.

For those looking to expand beyond core holdings and seeking investments that could endure future tariffs or trade disputes, it may be wise to consider options with strong potential to withstand prolonged tariff pressure.

Seeking stability

Certain investments are known for helping portfolios stay resilient during turbulent periods. While these assets are not always flashy and may not deliver spectacular returns, they can serve as effective portfolio balancers. Two examples stand out.

Commodities—including precious metals like gold and silver, energy products such as crude oil and natural gas, industrial metals like copper and aluminum, and select agricultural goods—can be sensible choices when tariffs are in effect. Commodities often benefit from inflationary pressures and supply disruptions, and as real assets, they can act as a hedge against the erosion of purchasing power.

Source: IndexBox Market Intelligence Platform