00:00President Trump announced a 30% tariff on all goods coming out of Europe, Canada, and Mexico.
00:08So just to put this into a little bit of context for you, we do roughly $1 trillion of trade with
00:15the European Union. So that's all the members of the European Union, not including the United
00:19Kingdom, the UK, per year. We do around $750 billion a year worth of trade with Mexico,
00:26and we do $700 billion worth of trade with Canada. These are our three largest trading
00:32blocks, and you put them together, this equals roughly $3 trillion out of $7 trillion worth of
00:41trade, or roughly just about 40% of all the trade that the United States does. Needless to say,
00:48and we don't have to get into it in so much detail in this episode, a 30% tariff is just going to
00:54halt trade. If it doesn't halt trade, it's going to make trade so expensive such that you will get
00:59shortages and all those things, inflation, all those things that we spoke about in April. But
01:05we don't have to talk about that this episode because we already know all the negatives of
01:09if we actually go through with these tariffs. My worry is something about markets and market pricing
01:17and signals that the president might not be getting. So if you guys recall back in April,
01:24what made Trump back down on those tariffs? What made him pause the tariffs? It was that the stock
01:30market fell 20% in four or five trading days. It's that bond yields surged roughly 50 basis points in
01:37three or four trading days. It's that the dollar was falling in unison with all of these events,
01:42which was highly atypical during all of these things. For all intents and purposes,
01:46we had a mini financial crisis in April. And the cumulative impact of all of those
01:52simultaneous crises was that Scott Besant, you know, whoever else that may have been in the White
01:59House, they were able to get Trump to walk off the ledge and do a 90 day pause on the tariffs to
02:05negotiate, whatever you want to call it. Bottom line, he paused the tariffs and it did not go into effect.
02:10We've since passed that 90 day deadline and we've extended it to August 1st. So we all know the
02:17narrative of Trump taco. Trump will always chicken out. Don't worry about him. He's too afraid of
02:22markets. Just stay invested. And I agree for the most part, you should stay invested within your risk
02:27parameters. But, and this is really important and unique to this event, and no one's talking about
02:34it for whatever reason. Markets are not reacting to Trump. That could actually be a problem.
02:41Follow me here. The stock market is nearly at an all-time high, just off an all-time high.
02:46Bond yields are not in crisis territory. The dollar isn't doing well, but it's not like in free fall or
02:52anything. You know, home prices are at all-time high. Unemployment is holding up for now, right?
02:58So Trump, in his brain, may not be getting the signals from the market of how devastating 30% tariffs
03:05on Europe, Canada, and Mexico would actually be if he went through with it, right? And if he does not get
03:11that signal from the market, what if he goes through with it? We know this guy has been speaking about
03:17tariffs for 50 years. For better or for worse, whether he's right or he's wrong, I clearly don't believe
03:21he's right on this, but he truly believes in tariffs as a tool, right? He only backs off when
03:28stuff hits the fan, right? If stuff is not hitting the fan, what do we do, right? If we don't get a
03:38correction in markets, does he go ahead with these tariffs? Because if he does, you can wipe away the
03:43second half of 2025. There's no way to do it. There's no way to do commerce. There's no way to do trade
03:48with these trade barriers in place. This is effectively an embargo that we are placing on
03:53countries like Europe, Mexico, Canada, let alone China, let alone Brazil, let alone whoever else
03:59has been tariffed in recent days, South Africa, whoever it may be. So we're at a little bit of a
04:07catch-22 here. Either the market, in my opinion, has to sell off a little bit here, or Trump believes
04:15these tariffs are a good idea, goes through with them, and then markets sell off anyway,
04:20because earnings are going to get revised down. We saw back in April how quickly recession became
04:26consensus before Trump's back down. We saw how quickly companies were guiding him. We have a few
04:31weeks of inventory left, and then our shelves will be bare. Walmart, Target, Home Depot, Lowe's,
04:37you name it, companies, auto companies, GM, Ford, they were saying we cannot do commerce if this is
04:42going on. So we have to look at this. Now, my next part of this podcast, I want to just talk a little
04:50briefly about what are we doing with all these tariffs, right? Why do we keep doing this, right?
04:59I, myself, I'm not a Republican. I'm also not a Democrat. I'm just, I think of myself as an
05:04independent. I just like to call balls and stripes. I see it how I see it. Sometimes I criticize the US
05:10government. Sometimes I praise the US government. But what are we doing with these tariffs? We're just
05:16bluffing nonsensical numbers, randomly generated numbers on countries. We did it in April. Now it looks
05:24like we're doing it all again now. We clearly cannot go through with this. Nobody, by the way, is coming
05:31to negotiate. Look, they had 90 days to negotiate a deal. They got one lousy deal done with the UK, and it
05:37wasn't even much of a deal. I don't even know what they negotiated at the end. Does anyone know? You
05:41can comment if you really know what they negotiated. I don't know. I didn't really see much that was so
05:46immaterial to the market. But please comment if you did. But my point is, why are we doing this?
05:54Like, we are wasting time as a country. Like, why are companies having to focus so much on tariff
06:03rates that are changing with a three in the morning true social post? This is no way to do business.
06:09And we're seeing that somewhere like dollar. I think foreigners are saying, why would we waste our
06:14time with this country? This is psychopathic. This is not normal how this country is behaving.
06:20Why would we can go to 100 different countries? We can go to the UAE. We can go to Singapore.
06:25You know, we can go to Australia. We can invest anywhere. Why would we deal with this craziness?
06:30So, that's just a concern of mine that we have to actually have a plan with these tariffs.
06:37It's not enough to go out and put psychotic crazy numbers out every three months.
06:42Nothing materializes. Extend pauses and then say we're going to do more, right? And also,
06:50call you yellow.
06:55Townships.
07:03There we go.
07:04All right.
07:06Now,
07:08we'll see you in the next one.
07:09There we go.
07:10That's a decision.
07:11We're going to do another.
07:12Here we go.
07:13Look,
07:14let's go.
07:15That's a decision.
07:17Get right.
Comments