The S&P 500 has plunged roughly 3% since Trump announced Monday that 25% blanket tariffs on Canada and Mexico, as well as an additional 10% tax on Chinese imports, would go forward. As all three countries moved toward implementing retaliatory measures Tuesday morning, the selloff has wiped away the entirety of the benchmark index’s post-election rally.

Much of what had traders excited about Trump’s supposedly pro-growth and deregulatory agenda is still intact, Schwartz said onstage at a conference hosted by Bloomberg in downtown Manhattan Tuesday morning. When it comes to the impact of tariffs, however, he acknowledged there’s plenty of uncertainty.

“A one-time tariff is a one-time step up, [in price], but it’s not sustainably inflationary,” he said. “Trade wars are sustainably inflationary.”

It’s the latter threat the market is responding to, said Schwartz, whose firm manages nearly $450 billion in assets, per PitchBook. The increased uncertainty does affect how his company evaluates the risk profile of prospective additions to its portfolio, Schwartz said, but he emphasized Carlyle won’t run away from good businesses.  

Jonathan Gray, president at private equity giant Blackstone, later said onstage that more of those promising companies will now be available on sale.

“What is happening now could change depending on what market participants or government officials do,” said Gray, who also serves as COO of the world’s largest private equity firm, which boasts over $1 trillion in assets, “and you’ve got to take that longer-term approach.”

Nonetheless, Dawn Fitzpatrick, the CEO and CIO of Soros Fund Management, said the size and scale of announcements out of Washington has been “breathtaking.” Fitzpatrick, who as CIO holds the role at Soros formerly occupied by current Treasury Secretary Scott Bessent, acknowledged the argument that manufacturers can absorb price increases without passing them on to consumers.

“But I think what you can’t control is consumer confidence and corporate confidence,” she said, “and I think that is what is falling off a cliff right now.” 

Schwartz, who turns 61 next week, is still enthusiastic about the underpinnings of the economy. He did acknowledge, however, geopolitical uncertainty hasn’t been higher since the fall of the Berlin Wall over three decades ago.

Raymond J. McGuire, president of investment bank Lazard, said CEOs are currently calling meetings and waiting as long as possible to look for clarity on what happens next with tariffs and what a new world order might look like.

“We’ve not seen this level of tariff, at least in modern times,” McGuire said. “We’ve seen it historically, the implications of which historically have been pretty dramatic.”

Sitting beside McGuire, former Treasury Secretary Robert E. Rubin vociferously decried the new administration’s attack on free trade, which he said would undermine America’s credibility around the world. Rubin, who served under former President Bill Clinton from 1995 to 1999, clearly isn’t looking forward to a potential new normal of “tariff walls.”

“We’ll all just be less productive, less efficient, and less effective economies,” he said.

Other famed investors are more optimistic, but markets seemed gripped by the former Treasury secretary’s fear on Tuesday.