Money Matters: Reading Markets Beyond the Map

A few years ago, I heard a quote: “The map isn’t the terrain.” If you mapped a drive across the country, you could take Interstate 80 from near New York City all the way to San Francisco.

Sounds easy—one highway coast to coast.

But over its ~2,900 miles, you’ll face mountains, sharp turns, varying speed limits, accidents, changing weather, drivers drifting into your lane, and plenty of other challenges the map doesn’t show.

Financial markets in 2025 had terrain that looked very different from the map. Looking back from 2026, the U.S. market was up nearly 20%, with foreign markets up over 30%. If you bought the S&P 500 on January 1, 2025, for $100,000, you ended the year near $120,000.

Still, 2025 was a clear reminder that the map isn’t the terrain.

In the spring, stocks sold off sharply. Volatility surged, and uncertainty dominated headlines. By early April, major markets were down more than 10%, and even seasoned investors warned of spiking inflation and mass layoffs. The selloff wasn’t caused by recession or collapsing earnings but by uncertainty around the global economy. Much of it came from the Trump administration’s anticipated broad tariffs as the U.S. trade deficit and government debt came into focus.

This newsletter isn’t judging whether tariffs are good or bad. The goal is to explain what tariffs are, why a country may use them, and how they ripple through the economy.

Why now? Tariffs resurfaced early in the 2026 news cycle during talks related to the governance of Greenland. And while volatility hasn’t matched 2025, it’s a good time to revisit how tariffs work, because they’ll likely remain part of the administration’s policy playbook.

What exactly is a tariff?

A tariff is a tax on imported goods.

When a company brings a product into the U.S., the tariff raises its cost at the border. The importer pays the tax, increasing the final price.

Those higher costs usually show up as:

• Lower profit margins
• Higher consumer prices
• Or both

In simple terms, tariffs make certain foreign goods more expensive.

Why are tariffs used?

Governments use tariffs because they’re a fast, visible lever for adjusting trade relationships. They’re usually deployed for three reasons:

1. Negotiation leverage: Tariffs pressure foreign governments by threatening reduced demand for their exports.
2. Domestic protection: Higher import costs make U.S. goods more competitive, helping domestic producers who’d otherwise compete with cheaper imports.
3. Strategic signaling: Tariffs signal that trade terms may change, forcing global partners to reset expectations.

Why do markets react so strongly?

Markets dislike uncertainty more than almost anything else.

When tariffs enter the conversation, investors must guess how they’ll affect:

• Profit margins
• Consumer demand
• Inflation
• Global growth

In 2025, markets weren’t reacting to confirmed damage—they were reacting to unclear rules and shifting targets, pricing in both America’s stance and how foreign countries might respond. Uncertainty was the only certainty.

Why the recovery happened

Despite the early-year selloff, markets finished 2025 strongly positive.

On April 9, 2025, President Trump announced a 90-day pause on most tariffs, and global markets surged. The worst-case scenario—an immediate, escalating trade war—fell off the table.

Businesses got time to adjust. Leaders gained time to negotiate. Consumers could breathe without worrying about another inflation spike.

The market finally had clarity.

The takeaway for 2026 and beyond

Tariffs aren’t new, and they aren’t inherently good or bad—they’re a tool. What matters is how they’re used, how uncertainty is managed, and how clearly policy is communicated.

And although markets shook off trade concerns in 2025, there’s no guarantee future volatility will behave the same way.

Short-term market moves often reflect emotion; long-term outcomes reflect discipline, diversification, and sticking to a plan.

We’re here to help you navigate the terrain—and stay aligned with that plan.