Trump Tariffs Have Markets Shaken—But History Says, “Keep Your Cool”
Markets are not applauding President Trump’s latest tariff play. Following his announcement of a 10% blanket tariff on all trade partners—and up to 50% on those with a U.S. trade deficit (Palmer, D., & Desrochers, 2025)—the S&P 500 did what markets tend to do when policy gets unpredictable: it stumbled. Hard.
The S&P 500 fell sharply Thursday and Friday, and by Monday morning, it was down another 4%, brushing right up against bear market territory (the 20% decline line from recent highs). At the S&P 500’s lowest, it had fallen about 19% since its February peak (Standard & Poor’s, 2024).
Investors are understandably on edge. China and others are already retaliating, hinting at a full-on trade war with global economic consequences. Meanwhile, concerns are growing at home over inflation and potential pressure on U.S. consumers. And yes, market historians are already dusting off references to the Smoot-Hawley Tariff Act—because what’s more comforting than invoking the Great Depression?
But before we let panic drive our investment decisions, it’s worth pausing to look at the big picture—one you see below.
This chart is making the rounds right now as a visual reminder that bear markets, even the ugly ones, don’t hang around nearly as long as they feel. It maps out the five worst downturns since 1928, including the 83% drop during the Great Depression, and puts them in the context of the market’s long-term trajectory. Even that historic nosedive now looks like a small dip in a long upward slope.
In fact, downturns are getting shorter. According to investment research firm CFRA: since 1945, the S&P 500 has gone through 24 corrections (10–19.9% declines), with the average drawdown lasting just four months. For bear markets, the average drop lasts 13 months and recovers within about 23 months (Stovall S, 2025). And more recently, things are speeding up. A 2024 Morgan Stanley analysis found that the median time to recover from a correction in the last decade was just 75 days—sharply lower than the historic average (Morgan Stanley, 2025).
As The Wall Street Journal noted earlier this year, “Investors have become faster to sell—but also faster to buy the dip.” (Zuckerman G. et al., 2025). In other words, volatility cuts both ways.
Yes, buying when everything feels like it’s falling apart is a tough mental leap. “Psychologically, that’s very, very hard for people to do,” says Scott Helfstein, head of investment strategy at Global X. “They’re looking at any dry powder they may have and saying to themselves, ‘Why do I want to put that at risk for further drawdown?’” (Franck T, 2025).
The answer? History overwhelmingly favors those who do. Over time, markets rebound and reward discipline. “Everybody wants an entry point,” Helfstein adds. “But those entry points come when your asset value is down 20%. That’s when you get to buy assets at a discount” (Franck T, 2025).
This is where that chart matters most. If you’ve got time—think years, not months—today’s panic could very well be tomorrow’s bargain. Or as The Wall Street Journal recently quipped, “The only thing more certain than investor anxiety during a downturn is hindsight optimism afterward.”
So no, the market does not love tariffs. But before you flee to cash or bury your portfolio in the backyard, remember: downturns are the toll you pay for long-term growth. And if you zoom out, history shows it’s a pretty affordable toll.
