The S&P 500 finished the day down less than 1% as news reports indicated continued dialogue among world leaders.
Shortly after the market closed, Justin Trudeau announced on X that he spoke with Trump and that “[p]roposed tariffs will be paused for at least 30 days while we work together.”
Markets will likely respond positively to the delayed implementation of tariffs on Mexico and Canada—but investors should take away from this episode an expectation of further market volatility as Trump advances his economic agenda.
We emphasize: this does not mean one should not be invested—just prepared given Trump’s leadership style for future stand-offs of this sort.
For a number of reasons, which we address below, this episode also highlights the value of gold-related investments within a diversified portfolio.
Economic leverage
Trump’s tariff announcement created volatility in markets but should not come as a big surprise.
He was quite clear throughout the Presidential campaign that he intended to use tariffs to extract concessions from other countries on a wide range of issues.
Trump’s signature campaign issue has been border control and stopping illegal immigration into the United States. It follows that he would move quickly to use tariffs as a strategy to make progress in this area.
Markets are generally negative on the prospect of tariffs actually being implemented because they may result in a range of negative consequences, especially if they escalate into a trade war.
Tariffs can be inflationary and disruptive to well-established supply chains.
While the implementation of tariffs may be mutually harmful, the harsh reality for U.S. trading partners is that tariffs would be significantly more harmful to their economies than to the U.S. economy.
In the case of Canada, exports to the U.S. represent nearly 20% of total Canadian Gross Domestic Product (GDP). In the case of Mexico, exports to the U.S. are close to 25% of Mexican GDP.
By contrast, U.S. exports to Canada and Mexico amount to just over 1% of U.S. GDP in each case.
This asymmetry in the tariff dynamic is not lost on Trump, who also expressed a willingness for the U.S. to endure “some pain” if the tariffs ultimately went into effect.
Just bluffing?
While it is likely that Trump would prefer to avoid especially onerous tariffs, he also does have a genuine interest in tariffs as a tool for revenue generation.
Trump of course implemented substantial tariffs in his first term as President. Trump and his economic advisers have also articulated a perspective on tariffs as a tool for achieving certain industrial goals.
Trump’s proposed Chair of the Council of Economic Advisers, Stephen Miran, who still awaits Senate confirmation, has expressed support for tariffs to an unusual extent relative to most economists.
Trump’s credibility when it comes to threatening tariffs stems in part from the fact that he genuinely sees a role for tariffs within a pro-America economic policy.
The Trump team believes tariffs have the potential to offset trade imbalances resulting from exchange rate manipulations and unfair trade practices.
Prepare for volatility
Trump does not hesitate to make waves. He clearly wants a successful economy and rising stock market, but he is also not hypersensitive to day to day shifts in stock prices.
As he implements his agenda, investors should be prepared for adverse market reactions to his statements and actions from time to time. These will often be amplified by the financial media, which by and large stands in ideological opposition to his agenda.
While investors have much to gain from Trump’s aggressive pro-growth economic agenda, they should also be prepared for further bouts of volatility as he challenges the global status quo.
Gold may benefit
Investors should also consider the merits of gold-related investments in the context of global trade-related frictions.
Gold in U.S. dollar terms has already advanced more than 7% in 2025, setting an all-time high above $2,800 per ounce. Gold also moved marginally higher in today’s trading.
Geopolitical uncertainty favors gold as a general matter. The implementation of tariffs may also incentivize nations around the world to follow looser monetary policies than they otherwise might.
Just as the imposition of tariffs often leads to a retaliatory response, we could see nations embrace easier monetary policy as a strategy to devalue their currencies in order to make their exports more price competitive.
A global “race to debase” would be inherently inflationary and benefit the gold price.
The “Trump Put”
As the tariff drama has unfolded, there has been discussion of the “Trump Put,” which refers to the idea that Trump will ultimately not pursue policies that are damaging to the stock market.
We have little doubt that Trump wants to see a rising stock market over the course of his term—but he has also shown that he is willing to endure some gyrations in the short-term to achieve long-term success.
Investors should consider taking a similar approach. Volatility can be uncomfortable… but also has the potential to create buying opportunities along the way.
