Tariffs, Trump, and turbulence: T. Rowe Price’s playbook for volatile markets

The truth is, we've all been spoiled. Consecutive years of 20% plus returns on the S&P 500, and 10% plus returns on the ASX 200, had us all thinking we were Buffett.

The recent volatility has been a timely reminder that markets, for the most part, are hard - if it were easy to make money all of the time, everyone would. 

But it's in these moments that we need to hang tough, have a plan, and execute it appropriately. That was the overarching message from T. Rowe Price's recent webinar, "Deal or No Deal: Trump, Tariffs, and Market Turbulence," featuring Scott Berg, Portfolio Manager for the Global Growth Equity Strategy, and Sam Ruiz, Portfolio Specialist in the International Equity Division.

The discussion centred on navigating escalating uncertainty in the wake of significant policy shifts, especially under Trump 2.0, and the implications for markets. The following summary highlights key investment insights from the session.

A market whiplashed by Trump’s second term

Berg opened with a candid assessment: 

“We had the single most positive market reaction to [Trump’s] election day of any US president in history,” he said, “and then the worst 100-day stock market performance since inauguration of any president in 50 years".

The contradiction epitomises investors' struggle with “flip-flopping announcements” and a market that, in Berg’s words, “isn’t even moving the way it should based on economic theory.”

Markets were caught off guard - not just by the policies themselves, but by the way markets reacted to them. For example, the US dollar has weakened despite traditional expectations that protectionist tariffs should strengthen it. 

“Normally in times of crisis, the US dollar goes up. It’s going down,” said Berg.

Framing this uncertainty is crucial. 

“We never viewed this as a single scenario. We always said there’s a wide range of outcomes,” Berg noted, highlighting the volatile mix of “crazy things said” and their unpredictable implementation.

The good, the bad, and the damaging: parsing Trump’s policy impact

In a structured rundown, Berg unpacked five key policy areas:

• Tax cuts: A bright spot. Trump’s push to make prior tax cuts permanent is “going better than anyone thought.” This could be legislated by mid-year, “something most CEOs are excited about.”
• Border control: “Sad humanitarian stories aside,” Berg noted that “most CEOs say it’s critically important the country controls its borders,” viewing it as a precursor to sensible immigration policy.
• Deregulation: While progress is slow, sentiment is improving. “98 out of 100 CEOs feel much better on the direction of regulation,” he said.
• Fiscal deficit: Surprisingly, Trump is openly discussing the issue. “Even just talking about it is more than previous administrations have done,” said Berg, citing a possible halving of the deficit by the end of Trump's term. 
• Trade Policy: Here lies the fault line.

“What’s happened on trade is definitively worse than anyone thought,” Berg stressed, calling it “punitive,” “illogical,” and “insane — even on allies.”

The cumulative impact, he argued, is real: “We’ve injected uncertainty nearly as high as COVID - except this was manmade and unnecessary.”

Scenarios from here: ranging from hopeful to recessionary

Berg sketched three forward-looking scenarios:

• Best case: Trade deals begin with Japan or India, eventually pulling in China. If paired with tax legislation, “markets could be up 5 to 10%,” said Berg.
• Base case: A mild recession. “Trump has pushed the slinky down the stairs,” Berg said, referencing Jamie Dimon’s analogy. The market is likely to experience a modest downward spiral due to uncertainty and damage to sentiment.
• Worst case: The US and China remain locked in economic warfare, with high tariffs sustained. 

“You can’t have the two biggest economies halting trade without causing devastation.”

Already, expectations for S&P 500 earnings growth have dropped from 12% to “probably two or three [percent]” and multiple compression has begun. 

“It’s very rational for the market to be down — I’m surprised it’s not down more,” Berg admitted.

Portfolio response: leaning into quality amid global rotations

Ruiz pressed Berg on capital allocation amid this turbulence. Berg painted a nuanced picture:

• CEO caution: “About half the CEOs have suspended guidance entirely,” he said. But it’s not all bleak — “some businesses are thriving or unaffected.”
• Stock examples:
• Charles Schwab (NYSE: SCHW), Netflix (NASDAQ: NFLX), and Intuit (NASDAQ: INTU) are seeing business as usual.
• Eli Lilly (NYSE: LLY) continues to benefit from strong drug data, despite sectoral tariff risk.
• European names like DA Aviation (AM.PA) and Spie (EPA: SPIE) are seeing a positive shift, as Europe increases defence and infrastructure spending.

Berg noted T. Rowe’s global analyst network, enabling nimble stock picking: “We’re not building from scratch when Europe gets hot,” he noted.

Volatility, he added, is an opportunity: 

“We try to use volatility rather than be taken advantage of by it. That means buying quality on down days and trimming on rallies".

Growth, AI, and the Mag Seven: tactical repositioning

Finally, Ruiz addressed the AI and mega-cap tech story. With AI-driven optimism cooling and macro sensitivity growing, T. Rowe Price has reduced exposure.

• “Right now, we have buy ratings on three of the Mag Seven,” said Berg, adding, “We’ve gone from overweight, to neutral, to underweight.”
• Tesla (NASDAQ: TSLA) is notably problematic. “It’s messy,” Berg said, pointing to declining sales, falling profits, and brand damage. “At least 20% of Teslas now have bumper stickers that say ‘I bought this before Trump got elected.’”
• On Google (NASDAQ: GOOGL), slowing click growth is a concern: “Search paid click growth has declined from double digits to low single digits,” due to AI alternatives.
• Still, Amazon (NASDAQ: AMZN) and Nvidia (NASDAQ: NVDA) retain long-term appeal — albeit now with more modest positioning.

The best of the Q&A session

Q: How is the team positioning in such a volatile environment?

“We have always been positioned across all sectors and regions,” Berg explained, reinforcing T. Rowe's balanced, global approach. Even within less conventional growth sectors like real estate and utilities, they’ve stayed involved. 

Q: What’s really going on with the US-China relationship?

Calling it “the elephant in the room,” Berg acknowledged the gravity of the conflict. 

“There is a real conflict... the most dominant power in the world feeling threatened by a rising power.”

He drew attention to contrasting negotiation styles: “Trump is all about The Art of the Deal, the Chinese are all about The Art of War. This divergence makes de-escalation tough, especially as, “both economies are incredibly dependent on each other,” yet stuck in a classic game theory “prisoner’s dilemma.”

Berg believes the Chinese are betting on Trump folding under pressure. “Their pain tolerance is higher…and CEOs from Walmart, Target, and Home Depot told Trump: ‘If this stays for 3–5 weeks, you’re going to get empty shelves and 100% price increases.’”

Q: Are markets overreacting?

Despite heavy news flow, “markets are only 2% down in USD terms,” noted Berg. “The NASDAQ is down 10–15%, but that’s after it flew like a rocket.” 

Berg's approach? 

“Use the worst to eventually be positioned to buy in and take advantage of selloffs… but don’t go too soon.”

Q: Which countries or regions stand out?

Post-Liberation Day, Berg observed a shift away from US-dollar dominance. “Does it make sense to have 70% of your money in US dollar-denominated assets with all this going on? No.”

T. Rowe is leaning into opportunities elsewhere:

• India: “In a great spot… more than a billion people, growing 7–8%.”
• Argentina: “Signed an incredible deal with the IMF, economy growing 6%.”
• Saudi Arabia: “Looks in a really good place.”
• Indonesia and the Philippines: “Largely unaffected by US-China tensions.”
• Vietnam: “Still positive for the medium term, but feeling a little more mixed post the recent developments. The country is currently caught between two 800-pound gorillas (US vs China)… we’ve recently sold some, but remain overweight.”

Q: What’s the outlook for Australia?

Australia, noted Berg, is also caught in the crossfire. 

“Sadly, Australia doesn’t have 100 million people and isn’t growing at 6–7%.” 

Final thought

T. Rowe Price’s philosophy of broad-based, durable growth, diversified across geographies and sectors, seems well-suited to this era of uncertainty. 

As Berg noted, whilst the recent period has been challenging for all investors, resilience matters more than short-term outperformance. 

“In Q1, growth underperformed value by 10%, but we only lost a little,” he said. And overall performance remains solid: 

“We’re up 10% on a one-year basis, and double digits on three and five years.”

And therein lies the rub. It's not about the short term for T. Rowe Price; "it’s about hanging in when it’s tough and delivering over time". 

In a market where volatility is the only constant, that sounds like a strategy built for survival — and eventual success.

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