The US stock market fell last Friday and again this Monday with the announcement of tariffs on Mexico, Canada and China. The market then recovered, at least partially, because of a temporary truce with Canada and Mexico. Disaster averted, delayed, or something else?

Most economists believe a tariff war would hurt the global economy – some countries more than others, but no one would come away unscathed.

Despite the risks, there are multiple reasons a potential tariff war should not cause you, the investor, to buy or sell stock. For example:

• We may avoid a tariff war.
• The dispute(s) may be short or benign.
• We may have a prolonged tariff war, but with multiple periods of optimism and pessimism. When do you sell? Or buy back?
• The market will likely be two steps ahead of you in factoring the tariff war into stock prices.

But in my mind, the main reason not to buy or sell on the threat of a tariff war is the same reason not to play 3-Card Monte. You get so caught up in following one new development (or, in the case of 3-Card Monte, one card) that you don’t realize what else is happening. And it’s the “what else” which ends up having a bigger impact on stocks.

A great example is the first Trump administration. Around Trump’s inauguration in January 2017, investors may have felt bullish at the prospect of income tax cuts. They may have also worried about tariffs. Both happened. But do you remember the single biggest impact on the stock market during those four years, by far? COVID. Just like in a game of 3-Card Monte, you didn’t see that coming.

Will the risk of a tariff war be “tarri-ble” or “tarr-ific” for investors? Because the next four years could play out in so many ways, I wouldn’t bet on either. I would call it “tarri incognito”. (Sorry, I couldn’t help it.) In other words, ignore the noise.

And if all this talk of tariffs has you feeling particularly distressed, this short video clip might put a smile on your face. It’s an iconic scene on tariffs from the movie, Ferris Bueller’s Day Off.