00:00Hey guys, this is Spencer Kimian with What's Moving Your Money.
00:04On today's episode, our pilot episode, we're going to talk about Liberation Day 2.0,
00:10all the tariffs that we've announced so far on, specifically this episode will be about Europe,
00:16Canada, and Mexico's trade tariffs that we've announced, what this means for markets,
00:22what this means for the economy. Is this just another negotiation tactic? Is this another bluff?
00:26Are we going to see another taco scenario here? So we're going to get right into it very quickly,
00:32so stay tuned and enjoy the episode.
00:37So over the weekend, Trump announced a 30% tariff on all goods coming out of Europe, Canada, and Mexico.
00:48So just to put this into a little bit of context for you, we do roughly $1 trillion of trade with
00:54the European Union. So that's all the members of the European Union, not including the United
00:58Kingdom, the UK, per year. We do around $750 billion a year worth of trade with Mexico,
01:05and we do $700 billion worth of trade with Canada. These are our three largest trading blocks,
01:12and you put them together, this equals roughly $3 trillion out of $7 trillion worth of trade,
01:21or roughly just about 40% of all the trade that the United States does. Needless to say,
01:28and we don't have to get into it in so much detail in this episode, a 30% tariff is just going to
01:33halt trade. If it doesn't halt trade, it's going to make trade so expensive such that you will get
01:38shortages and all those things, inflation, all those things that we spoke about in April. But we don't
01:44have to talk about that this episode because we already know all the negatives of if we actually go
01:50through with these tariffs. My worry is something about markets and market pricing and signals that
01:59the president might not be getting. So if you guys recall back in April, what made Trump back down
02:05on those tariffs? What made him pause the tariffs? It was that the stock market fell 20% in four or five
02:12trading days. It's that bond yields surged roughly 50 basis points in three or four trading days.
02:17It's that the dollar was falling in unison with all of these events, which was highly atypical
02:23during all of these things. For all intents and purposes, we had a mini financial crisis in April
02:28and the cumulative impact of all of those simultaneous crises was that Scott Besant,
02:36you know, whoever else that may have been in the White House, they were able to get Trump to walk
02:41off the ledge and do a 90 day pause on the tariffs to negotiate whatever you want to call it. Bottom
02:47line, he paused the tariffs and it did not go into effect. We've since passed that 90 day deadline and
02:52we've extended it to August 1st. So we all know the narrative of Trump taco. Trump will always chicken
02:58out. Don't worry about him. He's too afraid of markets. Just stay invested. And I agree for the most
03:04part, you should stay invested within your risk parameters. But, and this is really important and
03:10unique to this event, and no one's talking about it for whatever reason. Markets are not reacting to
03:17Trump. That could actually be a problem. Follow me here. The stock market is nearly at an all-time
03:24high, just off an all-time high. Bond yields are not in crisis territory. The dollar isn't doing well,
03:29but it's not like in free fall or anything. You know, home prices are at an all-time high. Unemployment
03:35is holding up for now, right? So Trump in his brain may not be getting the signals from the market of how
03:43devastating 30% tariffs on Europe, Canada, and Mexico would actually be if he went through with it, right?
03:49And if he does not get that signal from the market, what if he goes through with it? We know this guy has
03:55been speaking about tariffs for 50 years. For better or for worse, whether he's right or he's wrong,
04:00I clearly don't believe he's right on this. But he truly believes in tariffs as a tool, right? He only
04:07backs off when stuff hits the fan, right? If stuff is not hitting the fan, what do we do, right? If we
04:16don't get a correction in markets, does he go ahead with these tariffs? Because if he does, you can wipe
04:22right in the second half of 2025. There's no way to do it. There's no way to do commerce. There's no
04:27way to do trade with these trade barriers in place. This is effectively an embargo that we are placing
04:32on countries like Europe, Mexico, Canada, let alone China, let alone Brazil, let alone whoever else has
04:38been tariffed in recent days, South Africa, whoever it may be. So we're at a little bit of a catch-22
04:46here. Either the market, in my opinion, has to sell off a little bit here, or Trump believes these
04:54tariffs are a good idea, goes through with them, and then markets sell off anyway, because earnings
05:00are going to get revised down. We saw back in April how quickly recession became consensus before Trump
05:06backed down. We saw how quickly companies were guiding him. We have a few weeks of inventory left,
05:12and then our shelves will be there. Walmart, Target, Home Depot, Lowe's, you name it, companies, auto
05:18companies, GM and Ford, they were saying we cannot do commerce if this is going on. So we have to look at
05:25this. Now my next part of this podcast, I want to just talk a little briefly about what are we doing with
05:33all these tariffs, right? Why do we keep doing this, right? I, myself, I'm not a Republican, I'm also not a
05:41Democrat. I'm just, I think of myself as an independent, I just like to call balls and strikes.
05:46I see it how I see it. Sometimes I criticize the U.S. government, sometimes I praise the U.S.
05:51government. But what are we doing with these tariffs? We're just bluffing nonsensical numbers,
05:58randomly generated numbers on countries. We did it in April, now it looks like we're doing it all again
06:04now. We clearly cannot go through with this. Nobody, by the way, is coming to negotiate.
06:12Look, they had 90 days to negotiate a deal. They got one lousy deal done with the U.K.
06:16And it wasn't even much of a deal. I don't even know what they negotiated at the end. Does anyone
06:19know? You can comment if you really know what they negotiated. I don't know. I didn't really see much
06:25that was so immaterial to the market. But please comment if you did. But my point is, why are we
06:33doing this? Like, we are wasting time as a country. Like, why are companies having to focus so much
06:41on tariff rates that are changing with a three in the morning true social post? This is no way to do
06:47business. And we're seeing that somewhere like dollar. I think foreigners are saying, why would we
06:53waste our time with this country? This is psychopathic. This is not normal how this
06:58country is behaving. Why would we can go to 100 different countries? We can go to the UAE.
07:02We can go to Singapore. You know, we can go to Australia. We can invest anywhere. Why would we
07:08deal with this craziness? So that's just a concern of mine that we have to actually have a plan with
07:15these tariffs. It's not enough to go out and put psychotic, crazy numbers out every three months.
07:21Nothing materializes. Extend pauses and then say, we're going to do more. Right. And also,
07:29I think we're noticing this right now. I think Trump has boy who cried wolf syndrome. Right. No one cares
07:36what he says anymore. No one's even trading on this anymore. That's not good. First of all,
07:40it's not good for the prestige of our country that the president of the United States says really
07:45material economic statements and markets don't even flinch on them because they don't take him
07:50seriously. Right. But beyond that, what happens when he actually has to get a message across when
07:58he has to actually do something? What if another COVID crisis, as an example, came around? How do we
08:04know that he's going to keep his word on things like fiscal stimulus that may happen? Right. If the
08:10market doesn't believe him anymore, you know, trust is like an eraser. The more you wither away at it,
08:15eventually it's gone. There's no more eraser left and you can't use it anymore. So that's just a
08:20philosophical take that I've had. And again, my personal belief is that at the end, he's going to
08:27back down on these tariffs again. Right. He's got people that are smart in the Oval Office that no,
08:32he cannot go through with this. Right. First of all, there's not even much of a reason to be
08:36tariffing countries like this. As an example, with the European Union, we have,
08:40let's say, a hundred billion dollar deficit on a trillion dollars worth of trade. But guess what?
08:47The United States, we are the one that we're selling them financial services. We're selling
08:52them tech software. Right. We're selling them Goldman Sachs advisory work. We're selling them
08:58software subscriptions at 60 percent profit margin. They're sending us back Volkswagens at six percent
09:04profit margins and bottles of wine at five percent profit margins and tourism in the summer at maybe
09:10even zero percent profit margins because, you know, hotels are very cyclical. So I just don't see
09:16what is the need to negotiate with all these peoples. I agree with the president. Some things
09:22we can likely achieve with tariffs. As an example, I think we can use tariffs for advanced chips to get
09:31countries to not want to cooperate with China. We can put export controls as an example. We can do
09:37things in certain ways if they are targeted and they're coalition based that they would work. But
09:43just again, I don't know why it feels like we're back to Liberation Day. Every country in the world
09:48gets a true social post with a randomly generated number of their tariffs. So look, we have to look
09:53into this. We're going to monitor this all closely. It's coming up. I want you guys to let me know in
09:58the comments what do you guys think is going to happen? Do you guys think we're going to go through
10:02with these tariffs? Do you guys think we're not? Do you support tariffs? Do not support tariffs? A big
10:06part of this show for me and why I do this is I want to hear all your voices, whether you agree
10:12with me, whether you disagree with me, I want to hear what you have to say. And I promise I'm going
10:17to try my best to always respond in the comments to all of you. If you follow me on Twitter, you see
10:22that I respond to comments nearly all the time. So with that being said, I hope you guys enjoyed this
10:28episode and please tune in tomorrow. We have a very interesting episode about Brazil copper targeted
10:35tariffs, specifically targeted tariffs on raw commodities and what that can mean for inflation
10:41going forward. So have a good day, guys, and I'll see you guys tomorrow.
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