Recently, there has been a great deal of talk about tariffs and their impact on trade and, of course, their impact on the markets and your investments. We’ve learned (if we were not already aware) that a lot of countries employ tariffs for various imports and exports. The United States has taken an approach that places tariffs on a variety of items and countries exporting those items.
What is interesting is that while there will be US businesses which may benefit from tariffs there are also businesses which will definitely not benefit from those same tariffs. Your investment in the latter businesses may not do so well for the present while there may be a pop for other businesses that derive some benefit. Furthermore, it is possible that other countries will engage in new or additional tariffs of their own which will have a similar impact on businesses domestic and foreign.
What might this mean for the markets? It seems likely that on balance, there won’t be that great an overall impact from the US tariffs as you will have both gainers and losers. However, the fact that the government, through its intervention by way of tariffs, is in effect picking winners and losers will be a negative impact. The higher prices faced by consumers of items affected by increasing tariffs will also carry a negative impact on the markets. And we can’t overlook the likelihood of higher tariffs from other countries as well which, again, will negatively impact consumers for sure.
One might be forgiven for thinking that perhaps the better approach for all concerned is no tariffs for anyone. A more level playing field keeps governments from choosing the winners and losers and the consumer, wherever they may be, will gain to some extent. Businesses that are operated effectively will survive while others may fail without the extra bump from a specific tariff.
In the meantime, consider reducing investments in businesses/sectors you (and your adviser) feel will be negatively impacted by the announced tariffs and increasing your interest in those which will benefit.