Trump Pulls His Trump Card: How the 90-Day Tariff Pause Could Affect You

Stock Market News | In a dramatic turn of events, President Donald Trump has authorized a 90-day pause on tariffs, reducing the reciprocal tariff to 10% for over 75 countries. But that’s not all. He has raised tariffs on Chinese imports to a staggering 125%, a retaliation for China’s own tariff hikes, which now sits at 84%, up from 34%.

As the global markets react, investors are left wondering: What does this mean for the economy and how should they prepare for the potential fallout?

Market Reactions: Nasdaq's Historic Surge

The market reacted quickly to Trump's announcement, giving investors a reason to cheer. Fears of a looming financial crisis eased, triggering one of the largest rallies seen in recent years:

What Happens Next?

Trump’s 90-day window to renegotiate tariffs might offer some breathing space, but it also puts immense pressure on the remaining countries. While the U.S. and China engage in a high-stakes trade war, global markets, especially smaller economies dependent on both superpowers, will feel the pressure.

Additionally, the U.S. will have an upper hand, leveraging this time to demand changes that could cause even more volatility. This makes the next few months pivotal and investors should brace for more unpredictability.

That’s not all. The next few weeks hold major geopolitical events that could shift the tides even more dramatically:

• Ukraine-Russia Ceasefire: A resolution here could drastically reduce geopolitical risks.
• Fed Rate Cuts: These could provide additional relief for risk assets, including stocks and bonds.

What Happens to Risk Assets If Everything Aligns?

Picture this scenario by May 2025: The China deal is settled, Ukraine and Russia reach a ceasefire and the Fed cuts rates. This trifecta of events could result in a strong rally across risk assets. Markets could surge, especially with the relief of easing geopolitical tensions and lower rates.

Will Trump's Gamble Pay Off?

Trump’s tariff strategy, while risky, aims to strengthen America’s position in global trade. If successful, it could revive manufacturing, ease the debt burden and give the U.S. a stronger foothold in global geopolitics.

But, if it backfires, expect inflation, retaliation and a loss of global influence.

So, should you jump in now, or wait until things settle down for a clearer picture? How should you react?

Key Takeaways for Investors

The next 18 months will tell whether Trump’s gamble will succeed or fail. Investors need to remain agile and continue to stress-test their portfolios. While short-term relief might be on the horizon with a tariff pause, there's still plenty of uncertainty.

The most effective response to situations like these isn’t fear. It is focus, discipline and a long-term approach. Here are a few things to keep in mind:

1. Avoid “FOMO”

Resist the urge to blindly chase any rally. Don’t react impulsively to every headline or make quick decisions based on short-term market swings. Also read: The $6 Trillion Whiplash: How One Headline Shook the Market

2. Limit U.S. Exposure in Your Portfolio

With tariffs and global trade tensions in play, it's wise to minimize direct exposure to U.S.-revenue-dependent companies. Focus on stocks that are more rooted in domestic growth—Banks, NBFCs, for example.

3. Focus on Robust Balance Sheets

In times of uncertainty, companies with strong balance sheets—especially those with low debt-to-equity ratios (below 0.5x)—are better equipped to weather near-term shocks.

4. Valuation Comfort

Valuation matters, especially in a volatile environment. Look for stocks that are trading below their 10-year median P/E ratios. These offer a margin of safety and reduce the risk of overpaying in a potentially overbought market.

5. Consider SIPs or STPs

Instead of trying to time the market, consider Systematic Investment Plans (SIPs) or Systematic Transfer Plans (STPs). Explore diversified investment baskets like Liquide Wealth Baskets to spread your risk smartly.

Conclusion: 2025 is a Stock-Picker’s Market

2025 is shaping up to be a stock-picker’s market, with volatility creating opportunities for those with a long-term perspective. While geopolitical tensions continue to stir the pot, the key is focusing on businesses with solid fundamentals, clean balance sheets and sustainable growth trajectories.

Now is the time to assess your portfolio, stay focused on long-term goals and be ready for volatility. The stakes are high, but for disciplined, strategic investors, the rewards could be even higher.

Wondering how to capitalise on these developments and choose the right stocks?

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