Tariff reactions split along political lines, advisors say

Since President Donald Trump’s April 2 "Liberation Day" declaration and ongoing shifts in his tariff policies, financial advisors have found themselves increasingly cautioning clients against letting their political views drive investment decisions.

“I believe that our clients, depending on their political leanings, they do feel better or worse about the market and the economy depending on if their party is in power,” said David Settanni of the New York-based independent RIA, Settanni Financial. “I remind my clients that are Democrats on the left, I've had clients that are Republican that were worried in the past four years and the market did well. And the four years before that, when Trump was president, I had a different set of clients who were worried about the presidency, and the market did well.”

Settanni referenced research from Dimensional Fund Advisors to demonstrate how the stock market has historically produced similar returns regardless of which political party controls the White House or Congress. Andrew Herzog, associate wealth advisor at The Watchman Group RIA in Texas, cites similar research from Invesco to show historical market performance is apolitical while acknowledging his left-leaning clients have more frantically reacted to the recent market. 

“After an election year, for people to worry about tariffs, that's a very worthy thing to worry about. Those that did not vote for him [Trump] of course, think it's the end of the world,” Herzog said. “That's not all of our clients, but some that we can guess voted for Democrats are worried more and they're looking to get out of the stock market, perhaps do more fixed income or go to cash.”

“For those that did vote Republican, they either don't call, or if they do call and they're a little concerned about the market, they shrug it off and say, let's give it some time,” Herzog said.

Herzog added that his clients' attitudes towards investing in Tesla have fluctuated with their political leanings. Tesla’s stock is down almost 25% this year while the electric vehicle maker's CEO Elon Musk serves as a Trump advisor and head of the Department of Government Efficiency (DOGE).

“There have been biases against holding Tesla to any degree and saying we specifically do not want to own it. Please take us out of it,” said Herzog. “As advisors, our job is not to say, 'Well, let's react emotionally here.'" Instead, Herzog says, "'Let's look at the balance sheet, the price to earnings ratio. Let's look at other metrics to actually measure, do we think there's an investable opportunity here?'”

Larry Sprung, advisor and founder of the Long Island-based RIA Mitlin Financial, also emphasizes a financial planning approach that has remained steadfast across client portfolio allocations in the past month despite tariff policy-induced market volatility. 

“I don't think that I have to necessarily try to be a detective in terms of where they stand many times politically, I think we have some open and honest conversations with our families, and we have a pretty good understanding of where people lie on the political spectrum,” Sprung said.

“If you say you should ignore that completely, as much as I would love to do that, obviously depending on people's convictions, they may or may not feel more or less strongly about certain things,” he said.