UPDATE April 8, 1:00 PM
Since this article was posted, the financial markets have continued to be volatile. Tariffs are to blame, as no one seems certain of what President Trump will do and if the current announced tariffs will rise or fall. Personally, I still contend they are for negotiating purposes, not an attempt to cause a recession. Remember, emotion drives much of the selling we currently are witnessing, and markets could quickly reverse course if negotiations with various countries are successful. For now, I have taken this opportunity to sell some underperforming positions and make new investments that I feel will give us the potential for excellent long-term returns. I will keep you posted in the days ahead.
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Yesterday the financial markets violently reacted to the tariff announcement from President Trump, and it has carried over today. Panic led comments and headlines are popping up from so-called experts, with the truth being we simply do not know the impact to come and whether it is large or small. What we do have is a small sample of impact from President Trump’s first term in office, whereby inflation rates remained subdued despite the tariffs imposed. We will see if this time it is much different.
We have become a nation dependent on the world to produce our goods, while our goods available for export are blocked or severely disadvantaged. Our farmers are suffering from a broken trade system. According to the American Farm Bureau Federation, nearly 142,000 farm operations have closed in the last 5 years, with over 20 million acres no longer used for farming.
The hope in the Trump Administration, is for other nations to negotiate better trade deals with the U.S. to avoid the tariffs. We are the world’s largest economy at over $29 trillion and it is fair to say that other nations need us much more than we need them. That is the bet that Trump’s advisors are willing to make, and only time will tell if they are right.
Let’s break this down a bit:
TRADE DEFICITS
Walk through your home and look at where everything you own was produced, you likely will see nearly 100% made in factories overseas. Yesterday, the Commerce Department announced the February U.S. trade deficit with foreign nations in goods and services was a massive $122,700,000,000 ($122.7 billion) for one month and in 2025 the trade deficit is up 86% from 2024 numbers, which were all time highs. To clarify, that means we imported from other countries $122.7 billion more than what we exported to those same nations in one month alone.
JOBS AND COMMUNTIES DESTROYED
According to a study from the United Auto Workers union, over 90,000 plants and factories have closed in the United States in the last 20 years, destroying the economies of towns both large and small across the country. Remember the problems we had during Covid getting anything because of the supply chain problems? The fights over toilet paper, paper towels, and supplies of everything else we depend on every day were scarce. How quickly we changed from a nation which produced its own goods and services, to one that relies on everyone else in the world for nearly everything we consume.
TARIFFS
The Trump plan is to put pressure on countries to open their markets to U.S. goods, hopefully reducing the massive trade deficit we have. Many think the announced tariffs (which are much larger than anyone expected) will result in new trade deals. In my adult life, this is the first attempt by a sitting U.S. President to try and fix a broken import/export system. However, it is being met with stiff resistance from the world, as many profited from the current system.
During our breakfast seminar, I talked about the possibility of a new paradigm in America…one where we no longer tolerate excessive spending, fraud and abuse of taxpayer dollars, and one where the world equally trades goods and services. I did mention that it was a tall order, as too many people profit from the current rules and systems in place. Does the American public have the will to make change, or are things simply too easy today the way they are? That remains to be seen.
$1,250,000,000,000 and $36,700,000,000,000…$1.25 trillion annual trade deficit and $36.7 trillion in national debt. I would hope the nation would wake up to this, but I am afraid we have turned into the America that was. Better to fix it rather than wait until a crisis when you may have no options left. The handling of the reciprocal tariffs has been sloppy to say the least, and the markets are sending a clear message to the Trump administration. So far it is the right idea…but wrong execution.
BOTTOM LINE
Until then, what do we do? Remember wealth is created or destroyed in volatile times, as markets always overreact one way or another. The people who panicked in 2008 and sold their investments destroyed personal net worth forever. For us, panic is a wealth killing emotion, not a strategy. We will take the emotion out and make the necessary adjustments or changes we feel are needed, all aimed at taking advantage of the market opportunities. If your time frame in investing is 6 months, then you need to let us know as soon as possible. However, if your time frame is the rest of your life and leaving a legacy for your kids and your grandchildren’s lives…then look at this as another excellent opportunity.
Please remember that this is my opinion, based on my own research and experience of 40 plus years of economic and financial markets study. The one thing that I have learned from observing President Trump over the years is that he loves to make deals, and I suspect we will be seeing agreements with other nations happen over the coming months, creating a new normal.
As always, thank you for your business and friendship. Please do not hesitate to share this with friends and families who may be concerned about the current situation. As a team we are here, so don’t hesitate to reach out to us, or better yet, reach out to me personally.
Have a blessed day.
Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is no guarantee of future results.