Capitalist Investor

Trump Tariffs: Good or Bad? Ep. 290

• Strategic Wealth Partners

Share episode

On the latest episode of the Capitalist Investor podcast, hosts Derek, Tony, and Luke delve into one of the most polarizing economic tools in modern trade policy—tariffs. As the 2024 election season heats up, the hosts provide a nuanced look at tariffs, their history, their impact, and the potential future implications for both the domestic and global economy.

1. Introduction to Tariffs and Their Impact
The episode kicks off with a discussion on the basics of tariffs—essentially taxes on imported goods—as a tool for influencing trade policy. Tony explains how tariffs can increase the cost of foreign goods, ostensibly to make domestically produced goods more competitive. This leads to a balanced discourse on how tariffs can be seen as either a protective measure for local jobs or an added tax burden on consumers.

2. The John Deere Case Study
The conversation then transitions to a specific example involving John Deere. Tony mentions how John Deere moving its plants to Mexico would result in higher costs for American consumers if Trump were to impose a tariff. Derek and Luke weigh in on the broader implications, examining how such tariffs aim to keep jobs in the U.S. but at the potential cost of higher prices for farm equipment and other consumer goods. This case study serves as a practical lens to explore the multifaceted impact of tariffs.

3. U.S. Auto Industry vs. European Tariffs
Tony shares a fascinating insight about the scarcity of American cars in Europe due to high European tariffs. He ponders whether the U.S. could employ a similar tactic against European car manufacturers like Mercedes and BMW. This segment highlights a potential strategy to level the playing field and stimulate domestic manufacturing, although it comes with the trade-off of higher prices for imported luxury cars.

4. Trump and Biden's Tariff Policies
Luke brings up the political implications by discussing Trump’s approach toward China and how tariffs were used as leverage to negotiate better trade terms. Interestingly, the hosts note that the Biden administration has maintained many of Trump's tariffs, indicating bipartisan recognition of their potential utility. Tony compliments this by speculating on the course of future tariff policies and their economic ramifications, stirring a thought-provoking dialogue.

5. Inflationary and Deflationary Impacts
Finally, the episode tackles the broader economic impacts of tariffs, particularly their inflationary effects. Luke and Tony discuss how imposing tariffs can drive up prices for consumers, contributing to inflation. However, they also consider the flip side: if tariffs succeed in preserving American jobs, they could mitigate worse economic outcomes like mass unemployment. This balanced perspective provides listeners with a comprehensive understanding of tariffs' dual impact on the economy.

As the discussion wraps up, the hosts agree that tariffs will remain a significant talking point as the 2024 elections draw near. They encourage listeners to stay informed and consider both the short-term and long-term effects of such policies on their investments and overall economic health. The episode concludes with a call for audience engagement—inviting questions, comments, and show ideas to continue the conversation.

For investors and economists alike, this episode of the Capitalist Investor provides a timely and insightful exploration of tariffs, making it an essential listen for anyone looking to navigate the complexities of modern trade policies.
Stay tuned to the Capitalist Investor for more episodes deciphering the economic currents shaping our world.

Hello and welcome to this week's episode of the Capitalist Investor. As always, you have me, diamond Hands D, and we got the whole crew back together this week. Tony the tiger. Cool hands, Luke. What's going on? What's going on, man? What's going on is my car won't move out of park. That's what's going on. That's an issue. That's a problem. Yeah. So I'm gonna take it apart tonight, see what I can do. And you all know I can't do things with my hands, so I'm probably gonna break it even more. So we'll see what happens. Yeah. Good luck talking about that. Cars and auto parts, we're actually talking about tariffs today. So automobiles actually have a lot to do with foreign exports. So I think that flows right into what we're talking about. The way he's all trump, the way you said that, I like thinking a Tommy boy, like, what's his name? Like Ted Szelinski. The common auto parts for the common man or something. The auto part kings of the midwest. All right, go ahead. I'm sorry, I digress. So all Trump can talk about is, oh, we're going to make everyone pay their fair share. And he's not referring to taxes the rich, he's referring to other countries like Japan and exports to the US. And every speech and rally is either talking about the border or tariffs. So we're going to focus on what tariffs are, what they mean, are they going to come about and what it means for your portfolio and the economy if Trump gets elected and hits on those tariffs that he is so proud of doing. Right? So a terrorist. A tariff is essentially an increase on prices for incoming goods, right? So this all sparked, Trump was doing a, you know, kind of an interview and said, hey, Don, John Deere is moving their plants to Mexico. And Trump said, if I become Mecca, if I become president, I would create a tariff. So if they were going to sell a farm equipment for $100,000 for a plow or something, right, whatever. Now, because they're making it in Mexico, that plow would sell for$120,000 in the United States, essentially. Right now you have the left and the right having two different views and lenses looking at this. If you look at Trump saying, hey, I want them to stay here and keep the american jobs and have them sell to Americans and keep your prices where they're at. But if they move, then all the jobs move, right? I'm going to get, I'm going to sell it for the same price, but I'm going to have it done with cheaper labor is what John Deere is thinking of moving to Mexico. And Trump wants to eliminate that. And then you have the left, like the, you know, Harris group saying you're essentially creating a tax on the us person. They are going to now have to spend more money on items they're not. They just got a 20% increase in taxes. I know the 20 grand goes to the government, but, like, this consumer needs to spend$20,000 more to get what they need. And, you know, in that example that I used, here's the one thing, and I'll let you guys go, is that I heard one of Trump's economic advisors come out and talk about this in particular, and I thought it was really interesting take. He goes, do you know that the United States auto industry barely sells any cars in Europe because of the tariffs that Europe has on our cars? They're like, 100%. You will not see an american car in Europe because of that. He goes, what if I went and knocked on or not even knocked on their door, but said, hey, all you mercedes and bmws, and we're going to tear a few guys. Then Harris will come in and say, now you're making everything more expensive for people who want a BMW or a Mercedes? Like, no, what Trump is saying is that what I'm gonna do is by hitting them back, maybe we just stop fighting. They dropped their tariffs and now we sell more american cars in Europe. That is the angle that you will hear the right say, saying, I am doing this to level the playing field. Yep. And that's what essentially the excuse he used with China. He's like, China's been taking advantage of us for so long. Back when he was elected, from 2016 to 2020, he put on the tariffs from two China in the first place to try to use that same angle that we need to make this fair, and we're going to use these tariffs as leverage to eventually take away once we feel like we're actually doing right business with China. So that's the same exact take that he's been using. And what's interesting is the Biden administration actually has kept the tariffs on that Trump put on, so they haven't taken him away. And Trump actually alluded to that in the election. He's like, if you are so upset about tariffs, you would have backtracked what I did and you haven't done it, right. You didn't done it. I think he gave him an atta boy, like, you didn't actually blow up something that I did because, you know, I think that's interesting. You're right. So. Well, you look like you wanted to say something there. No, the other thing is, I mean, the inflationary aspects, Tony, you hit on is everyone's so concerned about reinflation. And if tariffs are inflationary, and the answer to that probably is maybe yes. I think you hit on both sides. Great, Tony, that, you know, it could be inflationary, but also it could be leveraged future economic growth here in America once those tariffs are taken back or once we get what we want out of the leverage we use for the tariffs. If nobody has answers, probably both. If nobody has jobs in the United States, that is a big problem. That's deflationary. Right. So, I mean, if you can't pay your bills, that's a problem. I don't care about deflation, inflation. I'm like, if you don't have a job, you can't pay your bills. Yeah. Period. And if we are creating more work for us, but it costs a little bit more, we already went through this stage of inflation for no reason at all. Yeah. If we're doing this to keep our jobs, I would say I'm okay with it because I'm going to be busier, I'm going to have more work, we're going to have more workers. I'm going to get raises, I'm going to get promotions because we have to fill the work funnel. Yep. I don't know. That's. What is my life international like? Would you be, let's end on this note. Is this beneficial if Trump gets elected and access, like, what countries are going to benefit? United States will. In my lens, like, again, I'm sticking with that thing saying, hey, what, what, what if we punch Europe back and say, now we're going to put tariffs on all your imported cars? And that person that wanted their Mercedes or Porsche or whatever is now paying more. Maybe they'll go and buy a Corvette. Yeah, maybe they'll go and buy something like another american made sports car. I saw one of those Lamborghini suv's driving down the street. I'm just like, it just doesn't belong in Cleveland, Ohio. Let's just get rid of, you know. I saw a Tesla Cybertruck. Someone wrapped it in bright pink. Pink. Pink like barbie pink. I've seen quite a few cybertrucks around Cleveland. I don't know how that works. I thought there was, like, less than 200 out there in existence. I've seen quite a, I've seen quite a few, too. And that's the big thing, is to wrap them. But, yeah, but I mean, the luxury cars, like, maybe we start buying more american and less import. Trump give that a boy to Elon Musk yesterday. Now he's like, elon Musk. He's so smart. He's amazing. I love him. I love him. He's amazing. He endorses me. He thinks I'm the wonderful man himself. And he's like, you know, free markets just aren't there yet with Ev's. But, you know, there's, there's a time and place for Ev's. Elon Musk makes great products. Oh, it's funny. He's walking the fine line now. He's like, since Elon Musk endorsed him, gave him so much money, he's like, ev's will be there in the future, just not there yet. But we're soon. But Trump, Trump wants Elon to come in and help clean the house, you know, not spending $7 billion for six charging stations. Yeah. You know, if you want something that is actually going to make a difference right away, I mean, you can. The waste in government spending, I mean, that's, that's the low hanging fruit. There's a reason that it hasn't been. Cleaned up in nine, in nine months. In Argentina, they. The, the new president. Yeah. Cut. Fired half. Well, not fired, but he eliminated half of the us president, so we'll see. I mean, it. I know Mark has been making a lot of, like. That's been his latest push. He's like, I wish, you know, Trump would say, like, hey, what are my economic plans? Is to roll this guy in Elon and let him start taking a look at inefficiencies in cutting and the inefficiencies. Having an outsider come in and say, what in the heck? Because you got to wonder where this money goes. Where did $7 billion go for six charging stations? It sounds like corruption to me. I mean, that just, I mean, where else would it go? Research and development, like, they've been around. It's not like you had to create it from zero. Yep. It's corruption. I don't know where this money goes, but it's not to you and me. It's actually going from us to God knows where. Yeah, God knows where. The distribution of the certain new american. We work hard, we get taxed, and we don't know where the money goes. The smartest problem, the smartest people in the room are the people that aren't working. They're collecting the paychecks that have every comfortability and thing they ever want. You know, roof over the head food. Retiring at 25 years old, those are the smartest people in the room. Why do we work so hard? Start living in little houses? Yeah, sure. Or just on welfare benefits or food stamps. Like you have everything taken care of. You're retired, you're not living great, but everything taken care of. Also super inflationary. Supporting all that. Great for you and me and everyone else working, sure, but all right. Anything else on the tariff, guys? I don't think so. Obviously one to keep an eye on as we get into or we stay in election season here. But thanks for listening to this episode. If you guys have any questions, comments, show ideas, hit us up at info connect.com and we'll talk to you next time. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial, or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.