Will Tariffs and Slow Growth Spark a Wall Street Sell-Off?

Will Tariffs and Slow Growth Spark a Wall Street Sell-Off?
Tariffs are Locked In. (No more TACOs.) Can Wall Street hold up?
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“Some of Wall Street’s biggest firms are warning clients to prepare for a major market pullback as sky-high equity valuations slam into souring US economic data,” according to Bloomberg’s Natasha Solo-Lyons. So, is now the time to get defensive, while stocks are near an all-time high?
Here are the things we will look at in this blog.

Will Tariffs Cause Inflation?
General Motors $1.1 Billion Tariff Hit
Will Wall Street Sink or Soar?
Corporate Buybacks and the Magnificent 7
Will it Be 2022 All Over Again?
September is Historically the Lowest Performing Month of the Year
Should You Get Defensive?
 
And here is more information on each point.
 
Will Tariffs Cause Inflation?
In a global economy, where Asia is the factory of the world and many rare earth minerals must be sourced internationally, tariffs will increase costs – even for companies, like Apple, that have received an exemption. Economists are hopeful that tariffs will have a one-off effect on prices, and that inflation will not get sticky, but there is little doubt that companies and consumers will pay more for things.
 
We’re seeing higher costs at the grocery store, which also means a bigger tab when we eat out. Anecdotal information from other small business owners isn’t great either. My hairdresser sources her hair products from Europe, increasing her costs in a business that also pays high rent. So, many of us will end up paying more for food, highlights and haircuts at a time when consumer debt is at an all-time high, housing is eating up 30% or more of the family budget, and the personal savings rate is at an historic low.
 
Companies will want to pass as much of the increased costs as they can onto their customers, so that they can stay out of the red and maintain healthy profit margins. However, as we’re seeing in the auto industry, that’s not always possible. There is a global price war going on, particularly with electric vehicles, that has forced many companies to lower prices to compete. (Learn more in my EV blog.)

General Motors $1.1 Billion Tariff Hit
On July 22, 2025, in their 2Q 2025 earnings report, GM reported that the company swallowed $1.1 billion in tariffs that they didn’t pass on to the customer. The company forecasted that the impact in the 3rd quarter will be higher.
 
Ford reported that tariffs negatively impacted their 2Q results by $800 million. Ford expects a “net tariff-related headwind of about $2 billion” in 2025. The company had a net loss of -$36 million in the 2nd quarter, compared to net profit of $1.8 billion a year ago. This is tough news for a company that only recently moved up to investment grade from speculative status. S&P Global has given Ford a BBB- credit rating with a negative outlook. S&P Global indicated that “underperformance” increases the risk of a downgrade (to junk status again).  
 
Apple has just secured a tariff exemption, and other technology companies, including Nvidia, have some tariff relief. Companies like Meta and Google rely more on advertising and services than goods for their revenue. However, costs could potentially increase on the chips and data centers that are key to their business.  
 
Will Wall Street Sink or Soar?
Price to earnings ratios are elevated on equities. If earnings take a hit due to the increased cost of tariffs, which is happening, then the price-earnings ratio will look even more out of whack. That is negative for Wall Street. However, we have seen a massive amount of corporate buybacks, particularly in the Magnificent 7*. That could provide support for stocks.
*Alphabet (Google), Amazon, Apple, Meta (Instagram), Microsoft, Nvidia and Tesla
 
 All told, there could be more headwinds than support, however. (Keep reading.)
 
Corporate Buybacks and the Magnificent 7
1Q 2025 corporate buybacks of $293.2 billion set a quarterly record, according to Howard Silverblatt, the senior index analyst of the S&P Dow Jones Indices. Over the past year (through the end of March 2025), buybacks were almost a trillion dollars ($999.2 billion). Five of the Magnificent 7 were in the Top 8 companies with the most share repurchases – Apple, Meta (Instagram), Nvidia, Alphabet (Google), and Microsoft.

So, what happened in April of this year, when stocks dropped -20%, and can it happen again (without the rapid recovery)? Technology stocks dropped even further than the index in April, pulling everything down with them. According to the June 2025 earnings report, Apple reduced its buybacks by -19.3% in the June quarter. The slowdown could have been during that two-week period in April.
 
We’ve seen the general market follow Apple’s lead over the last decade. In December of 2018, when the S&P500 dropped over -9.0% (the worst December performance since 1931, in the Great Depression), Apple had suspended its buybacks. (Click to read my report from that time.)

​With Apple seeking an exemption from tariffs, it’s possible that a tacit part of the deal could include continuing their buyback program, which might provide some buoyancy for stocks. However, the company’s robust share repurchase plan didn’t save the markets from the rout in 2022.
 
Will it Be 2022 All Over Again?
In 2022, the S&P500 dropped -19.66%. The Magnificent 7 were some of the worst performers. Meta and Tesla dropped more than -60%. Amazon, Google and Nvidia were down by half. Apple sank by -26.8%, while Microsoft was off by -28.7%.
 

​Surprisingly, there were more corporate buybacks in 2022 ($922.7 billion) than in 2021 ($881.8 billion) or 2023 ($795.2 billion). The selloff wasn’t coming from the mega technology companies of the Magnificent 7.
 
2022’s flight to safety, away from equities, had a lot to do with high inflation, interest rate hikes (which slow down the economy), the invasion of Ukraine by Russia, two quarters of negative GDP (although a recession was never declared) and profit-taking from a spectacular 2021 performance. FUD*, according to the VIX chart, was double what it is currently.
*Fear, Uncertainty, Doubt
 
The economy is predicted to slow down in the second half of 2025. Earnings could turn to losses due to the impact of tariffs. Share prices are higher today than they were in the Great Depression, according to the CAPE Ratio. It’s easy to see why many Wall Street firms are warning their clients to get defensive.
 
The question is, “Where do you fly to safety, when paper losses are pronounced in the bond market?” We spend one full day on this topic at our Financial Freedom Retreat and will host a Fixed Income/Bonds Without Paper Losses Masterclass the Sat. after that training weekend. Join us online from the comfort of your living room.
 
September is Historically the Lowest Performing Month of the Year
As you can see in the chart below, September can be a disappointing month on Wall Street. If you haven’t rebalanced this year or aren’t sure that you have an age-appropriate, properly diversified plan, now would be a great time to get a fiscal checkup and/or an unbiased 2nd opinion (something I offer through my private coaching). Email [email protected] for pricing and information.

It’s human nature to wait until something is broken to fix it. However, when it comes to our money that is a terrible idea.
 
Should You Get Defensive?
We are overweighting 20% additional safe in our sample pie charts based upon historically high equity prices, a slowing economy, unprecedented levels of debt and a tightening of liquidity in many sectors, including DJIA stocks, long-term bonds and even Treasury bills. According to Heather Long, the chief economist at Navy Federal Credit Union,  “The economy is increasingly dependent on a small sliver of superstar companies and wealthy consumers to stay afloat because these are the only firms and families able to withstand the tariff onslaught. A highly concentrated economy increases the risk of a downturn — and will leave many middle-class Americans frustrated and strained.”
 
Bottom Line
A Wall Street selloff isn’t a given. However, what is assured is that if we wait for the headline, we’ll be late and could be in serious trouble. Most of us can’t afford to lose 20% or more of our wealth. A diversified strategy that we rebalance 1-3 times a year protects our wealth, allows us to get safe and hot in one easy plan, prompts us to add low and sell high, and takes the emotions out of the process (which often point us to the wrong side of the trade). (Click to learn more about that plan.)
 
There are certainly a great deal of challenges and headwinds for U.S. companies and consumers. When consumers are tapped out, and corporations are reporting lower earnings or net losses, stocks typically decrease in value. When the valuations are as high as they are today, they drop far and fast. (-20% in two weeks in April.) Sadly, the whales of Wall Street are the first to exit, while Main Street investors might not get the note until they’ve seen their wealth plunge, at which point they could be selling low. So, now is the time to make sure that we are ahead of the curve – capturing gains near an all-time high.
 
Remember that market timing rarely works. When we are worried, overweight a little safer rather than selling everything. (Always keep a percentage equal to our age safe from losses.) Get rich quick ideas, like piling into crypto or gold, can have windows of superior performance, followed by long Crypto Winters and gold deserts. Putting our safe havens in a hot slice or two of the nest egg pie chart system prompts us to capture gains, keep the bet within reason and even have the liquidity to buy low when everyone else has abandoned them.
 
Email [email protected] to receive links to our free web apps where you can personalize your own sample nest egg pie chart. Let us know if you’re interested in private coaching, an unbiased 2nd opinion or in joining me online for our Oct. 11-13, 2025 Financial Freedom Retreat.
 
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If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.

Receive the best price when you register with friends and family. Visit NataliePace.com to learn more. Call 310-430-2397 or email [email protected] for pricing, additional information and to register.

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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.