Tariffs, Trade Wars, and Tumbling Markets: What 2025 Investors Need to Know

Tariffs are back on the menu—and not in a good way.

With Trump back in the White House, a new wave of tariffs is already sending shockwaves through global markets. Economist Peter Berezin from BCA Research just dropped a bold (and bearish) take: he’s pegging the S&P 500 for a drop to 4,450, nearly 21% below where it’s trading now. That’s not just a dip—that’s a full-on revaluation of the market.

Add in his call that the U.S. may already be in a mild recession? You’ve got the recipe for serious portfolio pain—unless you know how to pivot.

Let’s break down what’s actually happening, why it matters, and what investors (especially younger, strategy-minded traders) should be thinking about next.

What’s Driving the Panic: A Breakdown of the New Tariff Era

In March 2025, Trump signed a wave of tariffs targeting China, Europe, and Canada. That’s stoking fears of a full-scale trade war—and investors are rightfully concerned.

According to Berezin, these tariffs aren’t just symbolic. They could jack up prices for consumers (inflation risk), push companies to raise costs or cut margins (profit risk), and trigger global retaliation (demand risk). Triple threat.

Even more importantly, Berezin argues that the market hasn’t priced in these risks yet. While the “Magnificent 7” stocks have taken some hits, the other 493 companies in the S&P 500 have mostly stayed flat in 2025—so there’s plenty of room for downside if recession fears grow legs.

Where the Big Names Stand: Diverging Views from Wall Street

Berezin isn’t the only one tapping the brakes.

Goldman Sachs chief economist Jan Hatzius recently cut GDP growth forecasts to 1.5% for 2025, down from 1.9%, and raised the odds of a recession from 20% to 35%.

And David Kostin, also from Goldman, slashed his S&P 500 target from 6,200 to 5,700, citing—you guessed it—tariff uncertainty and rising recession risk.

Translation? Even the traditionally bullish shops are hedging.

What This Means for Your Portfolio

If the S&P 500 does fall to 4,450, that’s a wake-up call for passive investors riding index ETFs or tech-heavy portfolios. But for active traders or those using automated strategies (like Surmount users), this kind of environment opens the door for outperformance—if you know where to look.

Let’s dig into three smart pivots you can consider right now.

1. Lean Into Defensive Sectors

Berezin called out consumer staples and gold as safe havens. These are your classic recession plays—think toilet paper, canned soup, and toothpaste. Glamorous? No. Profitable? Absolutely.

Gold’s already been rising as a hedge against both inflation and volatility. Consumer staples offer stability when everyone else is panicking.

Consider rotating into ETFs or strategies that overweight defensive names. These sectors historically outperform in stagflationary environments.

2. Watch Bond Yields and Start Shifting

If recession odds climb and inflation cools later in the year, the Fed may pivot. That could send bond prices higher. Long-duration Treasuries and bond-heavy strategies may go from zero to hero—especially as volatility spikes.

This is where automated strategies that adapt to macro shifts (like Surmount’s smart portfolios) can shine. If you’re still 90% in equities, it may be time to reallocate.

3. Don’t Bet on the Magnificent 7 to Save You

Look, Apple and Tesla are great, but when concentration gets this high, it’s a risk. The top 7 stocks drove most of 2023–2024’s returns, but now they’re dragging down the entire index.

Diversification isn’t just a buzzword—it’s protection. If we’re entering a more fragmented, volatile market, spreading your risk across sectors and strategies becomes essential.

If you’re still riding one-trick portfolios, consider tapping into rules-based strategies that balance risk across multiple market scenarios.

This Is the Moment for Strategy-First Investing

When headlines scream "recession" and Wall Street starts adjusting forecasts mid-year, it’s time to be proactive—not reactive.

The current market setup is exactly why Surmount exists. Automation isn’t about sitting back—it’s about putting tested strategies to work so you can avoid emotional trades and take advantage of market inefficiencies.

Whether it’s rotating into defensive sectors, balancing risk with bonds, or diversifying out of crowded trades, now’s the time to make smarter moves—not just bigger ones.

SEC Disclaimer: The information presented is for educational purposes only and not an offer or solicitation for any specific investments. Investments involve risk and are not guaranteed. Consult with a financial adviser before making any investment decisions. Past performance does not guarantee future results.