Tariffs are all you hear about these days. The markets wobble with each new pronouncement or reversal. in a sense, Tariffs have already cost millions of people a ton of money in their portfolios and that is before they have even been enacted.

History has shown over and over again that tariffs can be major economic problem. That said, there is no doubt that the trade playing field needs to be more level.

For decades it’s been the American plan to absorb losses on trade for dominance in global non trade policy. Put it simply, we were happy to exchange billions in trade deficits for increases in our sphere of influence.

But along the way this pesky thing called debt began to rear its ugly head. Since 2016, our national debt has soared to levels that eclipse what was owed in the years prior to 2016. And, now we are forced to pay the piper.

One way to reduce our debt is to reduce our trade deficit which is out of control. That’s where tariffs come into play. They can force parties to engage in fairer trade practices by allowing goods to flow between countries with more fair pricing.

Of course, if you are the country that has been on the good end of pricing, you’re not going to be happy with the reset. But, remember, these prices have been negotiated by all past administrations, the current one included. The new NAFTA or now the USMCA was negotiated by Trump 1.0 – so he’s admitting now it was a poorly negotiated deal.

By all means the US should demand fair trade. Other countries need to make the adjustment. But, what does it mean for you?

The truth is… tariffs are a tax.

How so? You’ve heard from one side that it raises revenue for the US government and you’ve heard from economists and businesses that it raises prices for individuals. Ok, so who’s right?

I’ll give you a simple example and let you decide. If French champagne is selling for $50 a bottle and a 100% tariff is imposed on that champagne, you have two choices. Buy a competing non tariffed bottle of champagne that was always available or pay $100 for the same bottle that you love.

So, you decide what tariffs do – a day ago it cost you $50 a bottle and now the same bottle costs you $100.

Over time, two things could happen. First, the parties can decide on a more level playing field or two (and this is what happened in the late 20s and early 30s, you cause a global economic slowdown as tit for tat tariffs choke the consumer). The decision is NOT yours, unfortunately, but knowing that tariffs can be a hammer, will allow you to prepare for what may come down the pike.

YOUR ACTION PLAN

While the trade wars are causing some economic instability, it’s nothing I haven’t been through before.

To see exactly how we’re playing the current tariff volatility, I invite you to join us in The War Room.

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