Episode 211: Trump's Tariffs: Who's Paying the Price (and Who's Going Broke?)

Hey, everybody, and welcome to this week's episode of the Weekly Wealth Podcast.

My name is David Chudick, and as you know, I am a certified financial planner.

Here's how I normally do the podcast.

Normally, I have a few episodes planned a few weeks in advance, but recording an episode today to talk about tariffs, because, as you know, yesterday President Trump put in some tariff rules, and we're gonna talk about some of the positives of tariffs, some of the negatives of tariffs, and really just the facts about tariffs.

And then that'll you make some decisions on whether you think these are going to be good or bad or anything in between.

I like looking at facts, not necessarily the information from the infotainment channels that sometimes have a little bit of biasness on either side.

And then I also want to talk about a quote that I heard.

As you know, I love the business owners.

This is a quote about business owners, and it's also something that gets a little bit philosophical, and I love to get philosophical.

So I hope that you enjoyed this episode.

And here we go.

Welcome to the Weekly Wealth Podcast.

I am certified financial planner David Chudick.

This podcast and my wealth management practice are both designed to help the mass affluent to live better lives by how they handle their money.

We talk about financial strategies, prosperous mindsets, and simply how to build true wealth.

So come on and let's enjoy this journey together.

So before we get started with this episode, I want to ask you, have you checked out our Instagram page?

So we'll put a link in the show notes, but also you can just go to Instagram, type in Weekly Wealth Podcast.

We're putting out some daily content, and as you know, I believe that how we handle our money should positively impact our lives and the lives of those around us.

So our Instagram content and all of our social media content is designed around that premise.

All right, so before talking about tariffs, I want to tell you about a quote that I heard that kind of hit me a little bit.

So I heard a quote that said our businesses are perfectly designed to give us the results that we are getting.

So let me say that again.

Our businesses are perfectly designed to give the results that we're currently getting now that can actually go with any part of your life.

It can go with your spirituality.

And I actually heard that quote while listening to a book for my men's group.

It can go with your health, it can go for your relationships or any part of life.

So we all have systems, and whether they're purposeful systems or they're systems that just Happen.

And these are what are giving us our results.

So look at your business and look at an area of your business and ask yourself, are these the results that I want?

Because I'm sure if your business is like my business, yeah, it's going great in some ways.

But in other ways, there are some areas that we would like improvements.

So ask yourself where you would like improvements and ask yourself, are your systems supporting that improvement or are your systems just kind of keeping you where you are or even making you go backwards?

Okay, so that's just today's thought of the day for the business owners, but really for anybody is your business is perfectly designed to give you the results that you're currently getting.

So.

So of course, the opposite of that means if you want different results, you need to design your business, your life, your health, your relationships, or any part of your life differently.

So let me know, go to our Facebook page and let us know where maybe some of your systems are not supporting the, the growth or the results that you want.

To me, this is fascinating because I know that a lot of people say that the economy is really tough right now.

It's hard to save money.

Things are so expensive.

We have tariffs.

We have this political party doing.

We have this political party doing that.

And yes, there is some truth to all of that, however much, maybe not all, but much of where we end up in life, financially, health wise, or anywhere else, is dependent on our systems, on our daily behaviors.

So give it some thought and let me know what you think.

Okay, so now that we talked a little bit about, my quote about your business is really designed to give you the results that you've been getting.

Now let's talk about today's big topic, and that is, is tariffs.

So this is not a political episode.

I typically am pretty neutral politically on the show, but I want to give you some facts about tariffs and then you can make some of your own decisions and you can decide you really need to be incredibly afraid of tariffs.

You need to maybe think it might be a blip on the radar or you can make some of your own decisions.

Okay, so today we're going to dive into a topic that been, that has been making headlines again, and this is tariffs.

So we're not going to be political.

This is purely educational.

And we're going to walk you through what tariffs are, a brief history, some examples of how they've been used for better or for worse, and explore some possible outcomes of the recent US Tariff policies like the Trump era tariffs.

All right, so let's just Jump in.

So at their core, tariffs are taxes on imported goods.

When a country brings in a product from another nation, the government can place a tariff, or really just a fee on those goods.

So what's the goal?

Sometimes it's to protect domestic industries from foreign competition.

Other times it's to generate revenue for the government.

And occasionally, tariffs are used as leverage in trade negotiations.

When a tariff is used, it usually makes the imported product more expensive, encouraging people to buy similar domestic products instead.

All right, so what about histories of tariffs?

Have they always existed?

Have they been around?

In our early years of the United States, tariffs were actually the main source of federal income.

Between 1790 and 1860, they made up about 90% of government revenue.

Okay, so things were different then.

It was a different world.

But back in the 1790s and 1800s, a lot of our government's revenue came from tariffs.

One of the earliest was the Tariff act of 1789, which helped fund the new government and pay off Revolutionary War debt.

Now, if you fast forward to the late 1800s, the McKinley Tariff of 1890 raised import duties to protect American manufacturers.

This helped some industries to grow, but also raised consumer prices and stirred international tensions.

Then there's the famous, or maybe infamous, depending on how you look at it, Smoot Hawley Tariff act of 1930, which raised tariffs on thousands of imported goods.

The goal was to help US Farmers and manufacturers during the Great Depression.

But what happened?

Other countries retaliated, global trade declined sharply, and it arguably worsened the Depression.

Okay, so that's what tariffs are.

That's what's happened with tariffs in the past.

And that's just a really brief history.

I encourage you to do more research on your own so that you can be educated.

But let's look at some of the potential pros and some of the potential cons of tariffs.

A few of the potential benefits are that tariffs protect domestic industries.

Tariffs can help small or growing industries compete with international giants.

Tariffs also can sometimes not always create jobs.

So if imports are reduced, local producers may need to hire more workers.

So that theory is if goods from another country become more expensive and Americans buy more American made goods, that will create more American jobs.

And finally, tariffs will generate government revenue.

Especially, like we said earlier in U.S.

history, tariffs were a major source of income.

So as goods are coming into the country, if tariffs are placed on that, that will generate some more income for the government.

Now, some might argue that the government doesn't need more income, it needs better spending controls.

And that is a whole other podcast to talk about that Conundrum there.

Now some of the potential drawbacks of tariffs are obviously higher consumer prices.

So tariffs often lead to price increase.

2018 tariffs on washing machines, for example, raised washer and dryer prices by over 10%.

So if a washer is 500, 600, 700, 800, $1,000 or more, your washing machine might have costed $100 or more, which, yes, that can be a strain on the pocketbook.

Another potential drawback could be retaliation from other countries.

So tariffs can trigger a trade war.

Other countries might respond with tariffs on US goods, which would hurt exporters like farmers and manufacturers.

So we do have to worry.

And consider the fact that other countries might say, if you're going to increase tariffs on us, we will increase tar on you and that will make your products more expensive in our country and you will sell less of it.

So that is certainly a concern.

And then finally, a potential drawback is less efficiency.

Protecting industries can sometimes reduce innovation or competitiveness in the long run.

So an argument can be made that instead of increasing tariffs to make imported items more expensive so that US consumers will buy American made products.

An argument can be made whether it's realistic or not, I don't know, we can debate it, but then maybe US manufacturers need to just find more efficient ways to produce products at a lower cost.

So I'm not saying which of those facts you should hold onto with a closed fist.

I'm just giving you some information that you can use as these tariffs are putting into place.

Okay, so starting in 2018, tariffs were imposed on a range of goods, especially from China, as part of a push to address trade imbalance and intellectual policy concerns.

So let's look at some of the possible outcome of those tariffs.

Again, keeping things neutral, but keeping them factual.

So domestic manufacturing investment did increase.

So some industries like steel and aluminum saw a boost in U.S.

production.

Higher costs for businesses.

U.S.

manufacturers that rely on imported materials like auto parts often had to pay more.

And that potentially raised prices for consumers.

Higher consumer prices.

One study found that 2019 tariffs were costing the average US consumer around $831 per year.

So in some houses, $831 a year might be catastrophic in amount of an expense.

In other houses, you would barely notice it.

There are shifts in global supply chain.

So companies began moving production from China to countries like Vietnam, India and Mexico to avoid tariffs.

And that trend might continue.

And then also there have been some retaliatory tariffs.

So countries like China responded with their own tariffs on U.S.

goods, especially agricultural products.

This hit some U.S.

farmers hard, leading to government aid programs.

And yes, there can be a short drag on gdp.

Economists estimated that a slight reduction in overall economic growth due to the effects of higher costs and reduced trade volumes and the uncertainty of tariffs and trade deals can cause stock market volatility.

And we've seen that recently.

And hopefully you've listened to my latest series of episodes on the weekly wealth podcast where we've done some deep dives into the stock market volatility.

We've talked about some things that you should be thinking about.

We talked about some questions that you can be asking yourself.

So these tariffs are one of the causes of the recent market volatility, especially in companies with global operations.

And we've talked about how this is a headline driven market and a lot of the market movement comes from the emotions of the tariffs.

So tariffs are powerful tools in a country's economic toolkit.

They can protect industries, generate revenue, and influence global negotiations.

And I think that's a big part of what's happening.

Now.

These tariffs are intended to influence global negotiations, but like anything, they come with trade offs.

And this can involve higher prices or strained international relationships.

So whether you're a business owner navigating supply chains or a consumer noticing price changes at the store, understanding tariffs might help you to make more informed decisions.

So what are your thoughts on the tariffs?

Are they horrible?

Are they going to collapse the economy?

Are they going to help spur on manufacturing growth within the United States and in our industries?

Is it going to be something in between?

Are they going to make products just unaffordable?

Are they ultimately maybe going to increase prices for a little while and then products will drop because US Manufacturing industries will catch up?

I don't know.

So these are questions for you to ask yourself.

But tariffs are not new.

They've been around for a long time.

There is some talk and I don't know how realistic it is that some of this tariff revenue might replace or decrease personal income taxes, but not sure if that'll happen or not.

But there's some talk on that.

So this is a very complicated discussion and anything politically, it is emotionally charged.

One side will think it's probably going to be the end of the economy.

The other side think it's going to change the company for the better.

And I don't know.

Like most things, I think the true reality will be somewhere in the middle.

So let us know what you think.

Go to our Facebook group.

So just go to Facebook or go to the link in the show notes and leave us some Comments Let us know what your thoughts on tariffs are.

Are they going to be horrible?

Are they going to be a good thing in the long term?

Are they going to be hurtful in the short term, but then maybe level off and, and let us know.

But one thing I do know, or I think anyway, is that most things don't turn out as badly or as well as we think that they're going to.

And also I think that there are always opportunities in every situation.

So if you are anti tariffs, let's breathe for just a second and look and see if there are some opportunities.

And if you're pro tariffs, this may not be the greatest thing ever and maybe there will be some negatives.

But let's look for the opportunities.

If nothing else, maybe a little stock market volatility.

Potentially depending on where you are and what stage in life you are in, your risk tolerance, this may provide some buying opportunities for you and some opportunities for you to get into the markets at potentially discounted stock prices.

So what are your thoughts on that?

And so there we go.

So I hope that gives you just some thoughts on tariffs and gives you some power and empowerment to make some of your own financial decisions and maybe lessen some of your financial anxiety.

And speaking of financial anxiety, if there's anybody in your life who has been expressing some financial anxiety, maybe they don't know and they've seen their stock market portfolios go up and down.

Maybe they're not sure if they're paying too much taxes, maybe they're not sure if they are taking the right amount of risk for their portfolio, or maybe they're concerned that they're taking too much risk or anything like that.

Send them my way.

I would love to talk with anybody about their money and about their 30,000 foot level financial situation.

I can point them in the right direction.

We may or may not have a permanent working relationship, but I believe that how we handle our money should positively impact our lives and the lives of those around us.

And I want this podcast and I want for my wealth management practice to be a piece of that puzzle in your life and in the life of the people that you care about.

So let me know if you have any questions.

Email me davidarallelfinancial.com if you'd like to.

If you'd like to chat and make sure to share this podcast, send it to somebody today, send it to somebody that you care about and see if they can get some value from the show.

All right everybody.

So we talked about today that your business is perfectly designed to give you the results that you've been getting.

So if there are some different results that you want, you probably need to put in some different systems.

And then we gave you some information on tariffs.

And I hope this has been valuable to you.

And if you happen to look at your investment statement and see that your account is a little bit down, let's not stress about that too much.

Let's still go about our lives and be good people.

And also maybe if you even see your investment statement balances increase a little bit, let's remember that life is short.

Let's have fun, let's help the world, let's make good financial decisions.

But let's also remember that money isn't everything.

And until next episode, I wish everybody a blessed week.

Thanks everybody.

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