Donald Trump’s latest wave of global import tariffs is sending shockwaves throughout world economies, drawing comparisons to the infamous Smoot-Hawley Tariff Act of the 1930s. Back then, protectionist policies triggered a global trade war, deepened the Great Depression, and led to nearly a decade of stagnant stock market growth. Long-term investors were left watching their portfolios go nowhere for years. So, are we heading down the same path? And more importantly, is it time to rethink your investment strategy?

What does history tell us?

History offers some clear warning signs. The Smoot-Hawley Act of 1930 slapped higher tariffs on over 20,000 imported goods. The world retaliated, trade collapsed, and what started as a financial crisis spiralled into a prolonged economic disaster. The Dow Jones paid the price, failing to break its 1937 high until 1946. Why? Because slowing global trade creates weaker economic conditions, and markets thrive on growth—not stagnation.

Fast forward to Trump’s first presidency in 2018, when tariffs were once again the weapon of choice. The result? The Dow Jones found itself stuck in a sideways grind around 25,000 for over four years. The pattern is clear—tariffs slow down future stock market gains. So, what’s your plan to navigate what could be another era of sluggish returns?

Managing your portfolio moving forward

The old buy-and-hold strategy might not be your best bet in the years ahead. Instead, a more active approach could be the key to staying ahead. And before you think this requires a PhD in rocket science, think again. A few simple rules and the right education can help you ride the market’s upswings while sidestepping the inevitable downturns. If history is about to repeat itself, wouldn’t you rather be prepared?

What are the best and worst-performing sectors this week?

The best-performing sectors included Consumer Staples up 2.53 per cent, followed by Communication Services, down 0.56 per cent and Healthcare, down 1.67 per cent. The worst-performing sectors included Energy, down 13.16 per cent, followed by Information Technology, down 8.31 per cent and Materials, down 7.08 per cent. 

The best performing stocks in the ASX top 100 included Coles Group, up 8.19 per cent, followed by Lynas Rare Earths, up 5.79 per cent and Woolworths Group, up 5.35 per cent. The worst-performing stocks included Mineral Resources, down 20.94 per cent, followed by Pilbara Minerals, down 18.99 per cent, and Whitehaven Coal, down 15.54 per cent.

What's next for the Australian stock market?

Last week, sellers firmly took the reins, dragging the All-Ordinaries Index down more than 4 per cent after Trump’s announcement of global reciprocal tariffs. Right now, any hint of negative news is rattling investor confidence—particularly among institutional players—sending the index swinging like a yo-yo. But could there be a silver lining hidden in plain sight?

Let’s take a step back. Since 2009, the XJO has seen five market corrections. Interestingly, four of those found solid support with nothing more than a simple trend line. The only outlier was the COVID-driven drop—an event-driven anomaly, which makes sense. Those four “typical” corrections also averaged around a 20 per cent fall. Given that we’re already down more than 10 per cent, we could be approaching the back end of what has been a fairly consistent correction pattern over the past 15 years.

That’s why the 7,400 to 7,300 level is one to watch closely. This zone has the potential to attract buying interest and may mark a turning point if history repeats.

Even with the broader market under pressure, there are always standout stocks bucking the trend. The key? Digging deeper to uncover those outlier opportunities.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the bestselling and award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.