Author: Jack Haxton
What has been going on?
As of April 7, 2025, the Dow Jones Industrial Average has seen large swings, including a drop of over 2,200 points just days ago on Friday, April 4th. The S&P 500 and Nasdaq have followed suit, with futures tanking in after-hours trading as investors learn of President Trump’s latest tariff announcements. The Cboe Volatility Index (VIX), Wall Street’s “fear gauge,” has spiked to levels we have not seen in nearly 6 months.
This volatility comes from Trump’s trade policies, including a 10% baseline tariff on all imports and up to 54% on China, which was announced on April 2nd. Global markets have fallen; Asian indices like Japan’s Nikkei 225 dropped 4%, and South Korea’s KOSPI shed 2.7% as a result. U.S. companies from Big Tech to airlines have pulled back, with stocks like Apple and Nvidia down over 7% in a single day. Investors, businesses, and consumers are struggling with fears of disrupted supply chains and a potential economic slowdown.
Why Are They Doing It?
The Trump administration’s bold economic playbook hinges on a “no pain, no gain” philosophy, accepting short-term volatility as the cost of resetting the U.S. economy for long-term strength. Trump’s tariff threats, which escalated this week with reciprocal tariffs on key trading partners, aim to level global trade deficits. The administration sees this as a necessary disruption to decades of globalization that have hurt American manufacturing and caused the U.S. to rely on foreign goods.
How It Affects Us in Buffalo
Globalization has cost Buffalo ~5,000 manufacturing jobs since 2015, with 2023’s Lackawanna steel plant closure and 2024’s tire factory shutdown slashing hundreds more. These jobs paid $5,000–$10,000 above service work, and those losses cut local wages by ~$25–50 million annually, creating more economic strain in a city with 29% poverty. Trump’s tariffs target this by raising import costs to spur local production, bringing back jobs to more and more cities like our own.
What is the future of this Playbook?
Trump’s overall agenda is extensive, including tax cuts, trade negotiations, and government efficiency to boost the real American economy.
- Trade Deficit: The U.S. trade deficit hit $918.4 billion in 2024, which Trump blames on “unfair” practices by countries like China, Canada, and Mexico. Imposing tariffs, he aims to shrink this gap, claiming they could raise $6 trillion over the next decade. Trump’s goal is to reduce dependence on foreign goods and bolster domestic production.
- DOGE: The Department of Government Efficiency (DOGE), led by Elon Musk, is slashing federal spending and potentially cutting 800,000 government jobs. Elon and his team are working hard to trim the deficit and free up fiscal space. Bessent has said this is a “responsible” way to address the 6.7% GDP deficit, which is typically only seen during times of war or recession.
- Bringing Back Jobs and Manufacturers: Trump’s tariffs are designed to incentivize companies to restore operations, reviving the industrial base in places like the Rust Belt. By making imports costlier, he hopes to spark a manufacturing renaissance, creating jobs and reducing the trade deficit—a healing process that he believes will help all Americans.
- Cutting Income Taxation: In the long term, tariff revenues and DOGE savings could offset the $5 trillion cost of extending the Tax Cuts and Jobs Act, while Trump has also mentioned eliminating taxes on Social Security and tips. Lower taxes, paired with deregulation, are meant to boost consumer spending and business investment, fueling growth. As a result, it could be something that we mention again in the near future.
Don’t Panic—This Market Drop Isn’t New Territory
We’ve seen this play before. The current market reaction mirrors 2018 when President Trump used a tariff strategy designed to disrupt trade, negotiate from strength, and ultimately come away with a better deal for the American people. His decision to delay some levies shows flexibility and a willingness to engage with foreign leaders—while making it clear that America will no longer be taken advantage of on the world stage. Despite the noise, the fundamentals remain solid. March job growth hit 228,000—double February’s number—and consumer spending is holding steady. Markets hate uncertainty, and that helps explain the volatility we’re seeing. But this is a temporary reaction, not a long-term trend. Trump and Bessent are focused on strengthening the American economy through tax cuts, fair trade, increased government efficiency, and bringing jobs back home. That’s a long-term vision built for growth.
The best way to protect yourself against market volatility and future corrections is to have a plan. At The Financial Guys, our team of experienced financial professionals will work with you to build a comprehensive plan tailored specifically to you and your family. Contact us today for your complimentary consultation.
