Terrified by tariffs? Rochester experts say keep a cool head

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President Donald Trump‘s erratic rollout of tariff increases on Canada, China and Mexico has created concerns for some when it comes to finances — from rising material costs for builders and manufacturers to a volatile stock market that’s been impacting people’s financial investments.

In response, those in the financial services sector advise that people manage costs, stay the course and not let emotions override one’s judgement.

While the tariff increases weren’t wholly unexpected, they’ve “create quite a stir of uncertainty,” said Charles Vita, chief lending officer at Canandaigua National Bank & Trust.

He said some contractors involved in local construction and real estate projects are starting to see surcharges added to their material costs, particularly with steel and lumber, as a result.

Such surcharges can increase a project’s budget, Vita said.

“A project estimated to cost $1 million may now be estimated to cost $1.25 million,” he said.

CNB has a healthy pipeline of clients involved with commercial projects, and the bank has no plans to put the brakes on lending for such projects, he said.

The bank is currently working with clients to help them navigate any changes that arise while reviewing their budgets.

That includes conducting a sensitivity analysis, which looks at the cost increases and whether the borrower can handle those additional expenses, he explained.

Vita said borrowers are finding ways to keep costs in check despite the new surcharges.

“They seem to be handling it,” he said.

Moves at the federal level — such as reducing interest rates on borrowing if the economy begins to slump — may also help offset price increases that occur from the tariffs, he noted, adding it is too early to tell what the result may be.

“We don’t yet know the long-term outcome of this,” he said.

Matt Tipple, managing director, head of Upstate New York for J.P. Morgan Private Bank, JPMorganChase, agreed that business owners are trying to navigate the rapid pace of activity at the federal level.

He, too, has seen some industries impacted from the tariff increases, especially manufacturers who may work in the automotive sector and others who also rely on suppliers for large orders of aluminum and steel.

Given the uncertainty, businesses may opt to delay capital investments or big strategic moves he said, adding that many are waiting to see the long-term policy of the administration and then plan accordingly.

Despite the challenges, companies continue to report favorable earnings, and the bank expects that growth to continue throughout 2025, Tipple said.

Additionally, there could be an upside to the tariffs if more manufacturing comes back to the U.S. as a result, he added.

Tariffs have been creating volatility in the market, so Tipple and his team continue to encourage investors to diversify their portfolios with a mix of stocks and bonds and even consider investing in gold.

Diversified portfolios are more resilient to market changes, he explained.

While investors are uneasy about the situation, the hard data, from low unemployment numbers to a slightly easing inflation rate, is still solid, Tipple noted.

“The hard data suggests we are holding strong,” he said.

Luca Zambito, an analyst and portfolio manager with Armbruster Capital Management Inc., agreed that uncertainty has been creating volatility in the market, but it may be temporary.

“Hopefully this is more of a short-term negotiating tactic than a long-term policy,” he said of the tariff hikes.

While the S&P entered correction territory on March 14 (a 10 percent decline), the market has shown signs of a rebound since.

And while it was under different circumstances, the current situation is better than what happened during the height of the COVID-19 pandemic when the decline was around 30 percent.

“We haven’t reached that level of volatility yet,” he said.

Still, Zambito said some clients are expressing concerns over volatility and he advises them to invest in the long-term and not make decisions based on short-term impacts, noting that the market regularly fluctuates.

Sticking with one’s original asset allocation and having a diversified portfolio remains key, he said.

Doug Hendee, chief strategy officer and senior vice president with Brighton Securities, said some of his clients are also upset over what they are seeing at the federal level – from tariff increases to layoffs of the federal workforce and funding cuts to federally funded programs and universities – and that is bleeding over into their perspectives on the stock market.

While the market is off to a rocky start this year, Hendee believes it is responding the way it should, given the economic data available.

“The market is reacting as it should be to an economy it anticipates is slowing,” he said, adding that not viewing tariffs as inflationary is inaccurate.

If the current situation is causing one to loss sleep at night, however, an investor may want to size his allocations accordingly, Hendee said.

Or investors may want to consider buying stocks that are now trading lower, he said, noting they may reap some benefits when the market recovers.

“The stock market may be the only place where people don’t take advantage of a sale,” he said.

Hendee – who sees interest rate cuts sooner rather than later to encourage spending – believes the situation will work out in the long-term, noting the economy is cyclical.

He also cautioned against letting one’s feelings about the federal administration affect one’s financial decisions.

“There are a lot of people who have a visceral response to this administration,” he said. “But don’t make bad (financial) decisions that will impact you long-term because of that.”

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