A new wave of tariff threats brought another round of volatility in markets heading into the long holiday weekend. In the unpredictable market environment of 2025, active strategies are worth consideration.
U.S. equity indexes declined on Friday as the current administration took aim at the European Union and Apple. Threats of 50% tariffs on EU goods beginning June 1 as well as on Apple sparked a sell-off in stocks and declines in the U.S. dollar. Tariff threats also extended to other smartphone manufacturers, such as Samsung, reported WSJ. The S&P 500 closed down 0.67%, the Nasdaq tumbled 1%, and the Dow Jones Industrial dropped 0.61%.
The EU, comprised of 27 countries, collectively makes up the U.S.’s largest trading partner. 4.9% of U.S. GDP in 2024 was attributed to EU trade, WSJ noted. The most significant imports from the bloc include pharmaceuticals, cars, and machinery. Current tariffs on the EU include the blanket 10% as well as targeted sector tariffs of 25% on all aluminum and steel imported to the U.S.
Invest for Tariff Uncertainty With Active ETFs
Continuous changes to the U.S tariff policy create a range of challenges for businesses and investors. The on again, off again nature of tariff rates undermines investor confidence in expectations. At the same time, they make short- and midterm planning for businesses difficult — particularly for multinational companies. The erosion of confidence and heightened uncertainty create an environment of ongoing volatility.
In addition to the more immediate impact of volatility, tariffs also add inflationary pressures. They’ll affect the path and rate of interest rates looking ahead, which has implications for stocks and bonds alike. The nebulous nature of U.S. economic policy alongside a growing U.S. deficit appears to also be taking a toll on U.S. bonds. The most recent auction of 20-year bonds was met with weak demand, while the flight from U.S. bonds continues.
With few safe havens in a challenging year, active management deserves consideration. These strategies offer the potential benefits of diversification alongside experienced experts managing funds. In times of uncertainty and shifting tides, active strategies also have the potential to remain responsive to changing risks and opportunities.
T. Rowe Price offers a variety of actively managed ETFs strategies to navigate difficult markets. Whether investors are looking to enhance their equity or bond exposures, the firm’s suite is worth consideration. On the equity side, popular funds include the T. Rowe Capital Appreciation Equity ETF (TCAF ) and the T. Rowe Price International Equity ETF (TOUS ). For those looking to diversify their bond portfolios, consider the T. Rowe Price QM U.S. Bond ETF (TAGG ) and the T. Rowe Price Ultra Short-Term Bond ETF (TBUX ).
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