Written By: Philip Lockwood

As we kick off the second quarter of 2025, investors are being reintroduced to something the markets really don’t enjoy: uncertainty. The recent announcement of tariffs has stirred concerns about inflation, global trade, and even the possibility of a recession — or worse, stagflation.

Let’s break it down and explore what this means for your portfolio.

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📌 What Tariffs Mean for Your Portfolio

Markets can absorb good news and bad news — it’s the unknowns that rattle them. And right now, trade policy is a big unknown. When tariffs are used as a bargaining chip, they often spark retaliation and supply chain disruption, leaving investors with more questions than answers.

Portfolios that are concentrated in sectors like tech, autos, industrials, or luxury goods — all of which are sensitive to global trade — it may be time to consider a change in investment strategy. Until recently, U.S. equity markets outperformed their global peers, making domestic investing the clear winner. But as policy shifts, we may want to expand our lens. Global diversification is becoming a more relevant strategy for long-term portfolio resilience.

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📌 How the Market Reacts — and How You Should Respond

Here’s the most important thing to remember: Tariffs don’t operate in a vacuum. Their impact depends less on the tariffs themselves and more on how companies, consumers, and central banks react.

Back in Trump’s first term, tariffs caused a sharp market pullback in late 2018 — but by early 2019, the markets had rebounded. That’s a key reminder: reacting emotionally to headlines is rarely a winning investment strategy. Staying invested and rebalancing when necessary is how long-term success is built.

As we gain more clarity on trade and policy, we’ll continue to reassess our asset allocation — I will explore the possibility of adding in more companies with strong pricing power and away from those companies most vulnerable to policy shocks.

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📌 Tariffs Are Just One Piece of the Puzzle

Tariffs grab headlines, but they don’t rewrite the rulebook. Inflation, interest rates, monetary policy, and global events all contribute to market movement — and that’s exactly why a disciplined strategy matters.

If you’re unsure how trade policy may affect your long-term plan, or whether your current portfolio is built to weather these kinds of shifts, let’s talk. Having a thoughtful, adaptable approach is the best way to move forward with confidence.

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Recession? Stagflation? What’s Really at Stake

We’re watching two big themes unfold this year: the uncertainty around policy, and the path of inflation. If tariffs continue to rise and uncertainty persists, we could see:

• Slower hiring or even job losses
• Rising inflation — especially in consumer goods
• And yes, the risk of a recession, or even stagflation

🌀 So, what happens in a recession?

A recession is defined as two consecutive quarters of negative economic growth. While they’re never welcome, they are a normal part of the economic cycle. Often, recessions lead to lower interest rates, increased stimulus, and — eventually — renewed growth.

🔥 And what about stagflation?

Stagflation is more difficult: it’s when inflation stays high while growth slows and unemployment rises. That scenario requires smart diversification and a portfolio that doesn’t lean too heavily on any one outcome.

The good news? We’ve been preparing for this. Our portfolios are built with flexibility — including smart income planning, asset location strategies, and safeguards against overconcentration. That preparation allows us to navigate short-term turbulence without compromising long-term goals.

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Where We Are Today — and Why It Matters

Let’s set aside the headlines and look at the data:

• The S&P 500 recently entered correction territory, posting its worst month since December 2022. (Source)
• On average, corrections happen every 1.84 years — while uncomfortable, they’re not unusual. (Source)
• In 2023, despite a 10% drop mid-year, the S&P still returned 26% overall. In 2020, the market dropped 35% before finishing the year up 18%. (Source)

These examples illustrate one key principle: Staying the course could potentially provide long-term results.

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Final Thoughts: Uncertainty Isn’t the Enemy — Inaction Is

Markets don’t like uncertainty. But smart investors use it as an opportunity to re-evaluate, rebalance, and recommit to their goals.

We don’t make decisions based on fear — we build plans based on facts. As volatility returns to the headlines, know that your plan is designed with this in mind.

And if you’re unsure whether it’s time to make changes or stay the course, I’m always here to talk. Let’s keep moving forward, intentionally and confidently.

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Philip Lockwood | Founder + Managing Partner

Address: 1501 Ingersoll Ave. Suite 201 Des Moines, IA 50309 Phone: 515-274-8006

Email: Plockwood@parklandrep.com Website: Lockwood Financial Strategies   Securities offered through Parkland Securities, LLC, member FINRA (FINRA.org) and SIPC (SIPC.org). Investment Advisory services offered through SPC, a Registered Investment Advisor. Lockwood Financial Strategies, LLC is independent of Parkland Securities, LLC and SPC   Securities offered through Parkland Securities, LLC, member FINRA/SIPC.