--- title: "Economic and Market Commentary: Why Tariffs?" description: "Our crystal ball on where markets are going is just as hazy as most Wall Street firms. What we do have confidence in is our long-term investment approach which seeks to utilize market consensus to find areas that are priced inefficiently and to diversify risk to stay fully invested through market cycles." image: https://synovusfamilyoffice.com/hubfs/Investment-Commentary-April2025-Image-1.png --- # Economic and Market Commentary: Why Tariffs? # Economic and Market Commentary: Why Tariffs? April 25, 2025 [Download the April 2025 investment commentary.](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) CIO Mike Sluder discusses the current economic and market environment and outlook for 2025. 2025 First Quarter Recap In the first quarter, we noticed a drop in enthusiasm for growth. The administration focused on tariffs instead of de-regulation and tax cuts, which had initially boosted sentiment. In December 2024 and January 2025, most estimates predicted U.S. GDP growth of around 2%-2.5% for the year and inflation close to 2.5%. The excitement was due to the continuation of the 2017 tax cuts and reduced regulations. However, attention shifted to tariffs in February, targeting border security and a focus on Canada, Mexico, and China. Tariffs increased and expanded to China from February through April. On April 2, the administration announced 10% tariffs across the board, with higher tariffs on China and Southeast Asia. The decline in the S&P 500 coincided with new tariff announcements. The market peaked in mid-February and continued to decline through the end of the quarter. The S&P 500 ended the quarter down 4.3%, with Consumer Discretionary and Tech stocks leading the decline. Energy, Healthcare, and Staples performed well, ending the quarter in positive territory. The downturn was opposite to the previous run-up, with the Magnificent 7 stocks* leading the decline and value stocks rising. Bonds provided some cushion to the selloff, with the Aggregate index up 2.8%. - [Why Tariffs?](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Reliance on China](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Tariff Anticipation](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Sentiment](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Uncertainty](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Credit](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Equity](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Fixed Income](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Alternatives](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) - [Portfolio Market Positioning](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf) 2025 Second Quarter Outlook Most of the macroeconomic conversation has focused on tariffs. While the tactical messaging has been inconsistent, there is a strategic plan from the administration. This plan aims to reduce reliance on China for critical items like medicine, rare earth elements, and technology components. According to the Trump administration, tariffs will generate revenue to help make the 2017 tax cuts permanent, bring back manufacturing, and make U.S.-based companies more competitive in international markets. Tariffs will not be completely eliminated, but they will be used to reduce trade barriers. They will also help reduce the world's reliance on the dollar as a reserve asset and address the vulnerable supply chain network with China. The economic effects of escalating tariffs are likely to include short-term inflation, slower economic growth, and lower profit margins for some companies. The biggest issue is the continuing uncertainty. This uncertainty could become self-fulfilling, as businesses reduce capital spending and hiring, potentially causing a recession. Estimates suggest the economy will slow but not necessarily fall into a recession this year. Policies to incentivize domestic production and extend the 2017 tax cuts may offset some of the higher costs affecting households. We continue to follow our strategy of being broadly diversified to mitigate the uncertainty around policy. While major indices have seen significant drawdowns, there are areas within equity and other assets that are up. A diversified mix of assets will help reduce volatility. [Download the April 2025 investment commentary.](https://synovusfamilyoffice.com/hubfs/Market%20Commentary/Economic-and-Market-Commentary-April-2025.pdf)   ###### Tags: [Market Commentary](https://synovusfamilyoffice.com/news-and-insights/tag/market-commentary) Post by [Admin](https://synovusfamilyoffice.com/news-and-insights/author/admin) April 25, 2025 [![](https://synovusfamilyoffice.com/hubfs/Site%20Identity/SynovusFamilyOffice%20logo.svg)](https://synovusfamilyoffice.com/) ****Customer Service - [Who We Are](https://synovusfamilyoffice.com/who-we-are/) - [What We Do](https://synovusfamilyoffice.com/what-we-do/) - [Locations](https://synovusfamilyoffice.com/who-we-are/locations/) Synovus - [Website Terms of Use](https://www.synovus.com/terms-and-conditions) - [Safety and Security](https://www.synovus.com/contact-us/safety-and-security/) - [* * ](https://www.linkedin.com/company/the-family-office-at-synovus/) Family Office at Synovus is a division of Synovus Trust Company, N.A. Trust services are provided by Synovus Trust Company, N.A. Investment products and services are **not FDIC insured, are not deposits of or other obligations of Pinnacle Bank, are not guaranteed by Pinnacle Bank, and involve investment risk, including possible loss of principal invested.** Synovus Trust Company, N.A. Is a subsidiary or Pinnacle Bank, a Tennessee bank d/b/a Synovus Bank. 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Is a subsidiary or Pinnacle Bank, a Tennessee bank d/b/a Synovus Bank. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Admin", "url" : "https://synovusfamilyoffice.com/news-and-insights/author/admin" }, "dateModified" : "2025-04-30T19:49:00.231Z", "datePublished" : "2025-04-25T12:03:16.000Z", "headline" : "Economic and Market Commentary: Why Tariffs?", "image" : [ "https://synovusfamilyoffice.com/hubfs/Investment-Commentary-April2025-Image-1.png" ], "mainEntityOfPage" : { "@id" : "https://synovusfamilyoffice.com/news-and-insights/april-2025-investment-commentary", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject" }, "name" : "The Family Office at Synovus" } } ```