.png)
Presented by John Fitzgerald
President Trump entered office with a desire to do things differently than his predecessor. He is certainly doing that. He has been aggressive in implementing some of his priorities. Better trade deals, lower government spending, tax reform, and deregulation could be beneficial to Wall Street and Main Street over the long term. It remains to be seen how successful the president will be in implementing his ideas, but here is what we know today about how policy uncertainty weighs on investors and how it could affect you.
Tariffs: Negotiating Tactic or Economic Policy?
President Trump has a history of floating trial balloons as a negotiating tactic. News last weekend that he would implement tariffs on Canada, Mexico, and China is the most recent example. To understand the impact of that strategy, it’s important to consider what might happen over the next few days and weeks.
There is a good chance nothing will happen. Already, we have seen the tariffs on Mexico and Canada delayed for 30 days after both countries agreed to do more to secure borders. This delay would buy all parties time to negotiate an outcome without tariffs, which would be the best-case scenario—an achieved outcome for one of the president’s priorities without affecting the wallets of U.S. consumers.
But what if the sides can’t agree to a resolution and tariffs are implemented in Mexico and Canada, in addition to China? Even if tariffs are scaled back, it would most likely result in higher costs for the day-today needs of individuals. The cost of groceries, for example, could increase quickly. We all need to eat, of course, and elevated prices at the supermarket have been a consumer concern over the past several years. If we see an uptick in prices, it could cause higher borrowing costs on credit cards and mortgages.
Historically, higher rates have affected equity valuations. This could lead to a period of heightened volatility in the stock market, though we are far from that point.
The Department of Government Efficiency (DOGE): What Does It Do?
DOGE was put in place to eliminate wasteful spending and increase deregulation. In theory, this is a good thing. Looking at ways to make the government more efficient is a worthwhile endeavor that should have long-term benefits for consumers and markets. But, as always, the devil is in the details. One person’s wasteful spending is another person’s necessary program.
The road from campaign promises to governing is difficult because the reality of being in charge often results in tempered expectations. Elon Musk, who leads DOGE, has already walked back the department’s original goal of cutting $2 trillion annually to trimming $500 billion–$1 trillion. Cutting $500 billion–$1 trillion in spending would still be a positive outcome.
But the real focus of DOGE is weeding out inefficiencies and fraud that leads to unnecessary spending. It isn’t focused on freezing or eliminating current payments on programs that provide a safety net, such as social security and Medicare. In fact, if it’s successful in achieving its goals, it could lower interest rates, lead to economic growth, and help make social security and Medicare stronger.
Market Volatility: What to Do Now?
Concerns about price increases in our daily expenditures or the end of government programs are paramount: these issues matter to Main Street.
We entered 2025 with good economic momentum and a strong jobs market. This backdrop has led to an optimistic outlook from analysts for earnings growth from U.S. companies. For now, markets are focused on potential short-term risks to that outlook. It’s important to remember, even during doom-and-gloom headlines, that periods like this tend to create opportunities.
No matter the news in the days, weeks, and months ahead, investors in the fixed income and equity markets will need to anticipate the effect on rates and stock valuations. It’s hard, if not impossible, to time markets. In the meantime, balance and diversification across equity and fixed income asset classes is the best way to navigate uncertainty in the economy, Federal Reserve policy, and actions from the new administration. Remain vigilant and look for opportunities created by short-term noise to benefit portfolios over the long term. Stay calm and carry on!
###
Fitzgerald Financial Group is located at 727 East Landis Ave, Suite 1, Vineland, New Jersey 08360 and can be reached at 856-692-0022. Securities and advisory services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through CES Insurance.
Authored by Brad McMillan, Managing Principal, Wealth & Investment Management & CIO, and Chris Fasciano, Chief Market Strategist at Commonwealth Financial Network®.
© 2025 Commonwealth Financial Network®
