March 2025 Draw Down

In light of recent market volatility and headlines out of Washington, we want to share our perspective on ongoing trade policy and market developments.

Over the past six weeks, the White House has announced a series of tariffs on America’s three biggest trading partners: Mexico, China, and Canada. Additionally, the US announced broader tariffs on all imports of steel and aluminum.  Some of those tariffs are already in effect. Others have been placed on hold but could take effect as soon as April. These policy shifts have roiled the markets, triggering a 9.3% draw down in the S&P 500 and a 13.6% correction in the NASDAQ.

It’s important to view those market moves in their broader context. This S&P decline follows two years of strong market returns. Despite this downturn, the S&P remains only moderately below its all-time high, matching levels seen just six months ago. Additionally, market corrections are a normal part of investing. Since Baldwin Wealth Partners was founded in 1974, the S&P has experienced 25 corrections of >10%. Yet over that same 51-year period that index has compounded at >12% a year. That history demonstrates the value of staying invested through periods of market turbulence.

Relatedly, our experience during President Trump’s first term could be a helpful guide to navigating this environment. In 2017 Trump threatened to dismantle the North American Free Trade Agreement (NAFTA) and impose a blanket 25% tariff on China. Ultimately, however, he negotiated a more modest set of tariffs. He kept the core of NAFTA intact under the US Mexico Canada Agreement (USMCA) while imposing a less draconian ~15% increase in average tariffs on Chinese imports. We could see a similar outcome in Trump’s second term: We believe tariffs are headed higher, but they may ultimately be more modest than recent pronouncements suggest.

At Baldwin Wealth Partners, we use that historical perspective to guide our outlook. While ongoing trade policy uncertainty could continue to drive market volatility, we remain optimistic investors may ultimately be rewarded for holding steady through this market turbulence. Additionally, we’re pleased to see allocations across fixed income, alternatives, and real assets including Gold and Real Estate Investment Trusts have provided ballast through these blustery markets. We believe those diversifying allocations will continue to play a key role in helping portfolios weather any stormy seas.

As always, we welcome the opportunity to discuss these recent developments and answer any questions you may have about your portfolio. Please feel free to reach out at any time.