What tariffs, stock market volatility, and prices mean for your wallet

As the President’s so-called “Liberation Day” approaches, the potential for reciprocal tariffs against U.S. trade partners looms large. BOK Financial’s Chief Investment Officer, Steve Wyett, joins us to discuss the impact of tariffs, stock market volatility, and the outlook for prices.

Q: As we approach Liberation Day, what does that mean for the markets and the economy?

“Well, that’s a great question. I’m not sure what or from whom we’re being liberated, but what we’re looking at is this is a day that the President has pointed to where some big tariffs that he’s been discussing will go into effect.

“We’ve seen some pretty good volatility in the stock market, as we’ve anticipated what that would be. But I thought yesterday’s price action was really interesting.

“We had a really bad week last week. Last Friday was a bad day. Yesterday, we came in early, as you reported, we were down pretty big. In fact, open down on the markets. But by the end of the day, the Dow, the S&P were actually positive on the day.

“So this is going to be a scenario where, as we think about where the markets are, where the economy is going to go from here, what is the difference between what we’ve anticipated is going to happen and what is actually going to happen?

“So when you just get down to the tariffs, really, there’s two things that we’re concerned about there. One is the potential of an impact on inflation, and to the degree that we are going to see some prices go up. If you’re looking at an imported good as the tariff is put in place, the price is going to go up. Now, may not go up the full amount of the tariff. There are ways companies can kind of work with that, but that’s a price increase.

“The other thing that the markets really trying to wrestle with is longer term. What does this mean for growth? And we’ve seen estimates that, depending on how tariff policy goes, that impact on growth may be as little as half a percent or as much as 2%. That’s a big range, and that will make a big difference on where we are as we move forward.”

Q: Do we expect overall prices to decrease, as some polls suggest?

“Yeah, that’s a great point. We can point back to President Trump’s first term in 2018 when he implemented some tariffs, and overall import prices did go down a little bit.

“Now, there were individual appliance prices that went way up during that period of time. And it’s hard to say that car prices are going to go down based upon what’s happening, but longer term, it’s a question of, are consumers going to pay those higher prices? Are they going to buy another good substitute, another good that’s cheaper?

“If that happens, then you could see that the overall price level doesn’t go up that much as the economy readapts to how we need to produce on a go-forward basis.”

Q: Do you think tariffs will still be a major topic next year?

A: “You know, Dave, that’s a great question. And President Trump has indicated that when asked, are the tariffs permanent, he said, ‘Oh, yeah, they’re permanent.’ Well, that’s how you have to say that, because if you just said they were temporary, then companies wouldn’t do anything.

“And let’s keep in mind what the goal is as the administration views this, and some of this goes back to COVID-19. Remember how our supply chains got so messed up because so much of our production was overseas. President Trump wants to see more production here domestically.

“That’s going to take a while, but one way that companies can avoid tariffs, if you’re importing, is to produce here. That’s more jobs. That’s a better economy here.

“That’s the longer-term goal. So as we move forward, that may be what we’re talking about, as opposed to the initial impact of the tariffs.”