Tariffs will be a headwind to corporate earnings since businesses have only two options: Absorb the cost increases, or pass the cost increases along.

Top holdings in the Vanguard Consumer Staples ETF ( VDC 1.09%) include retailers like Costco Wholesale and Walmart, every-day use product makers like Procter & Gamble, and beverage companies like Coca-Cola and PepsiCo.

No one can predict with certainty how the stock market will react to economic changes in the short term or long term. However, many experts expected that tariffs would cause the stock market's performance to suffer, and they were proven right in the immediate aftermath of new tariffs taking effect.