Everything an Investor Should Know About the Trump Tariffs in 2025

President Donald Trump has described the word "tariff" as "the most beautiful word in the dictionary."

And since Trump has retaken office, investors have been trying to figure out what proposed tariffs are likely to become reality, and which are likely bargaining chips.

Investors can no longer take for granted the consensus that more trade between two countries left both nations better off.

Instead, these new tariffs represent the biggest shift in global trade policy in decades... and have already ignited a global trade war.

When Trump first announced massive tariff hikes in April, investors panicked – causing a near-bear market in stocks. Then, when Trump pulled back on the plan, stocks soared back to new highs.

Looking ahead, whatever effects we've already seen from tariffs will only accelerate from here – including the risks of inflation, the likelihood of more U.S. manufacturing and related jobs, and the performance of both the stock market and the overall economy.

Every month, we'll get more and more evidence of the impact of Trump's tariffs.

The market doesn't care about sound bites, slogans, or political charm. It cares about the cold, hard facts... the real effects that tariffs are having on the economy.

On this page, we're featuring insights from more than a dozen top analysts and editors at Stansberry Research to help you make sense of what's happening in Washington, D.C., on Wall Street, and at home on Main Street.

Free Markets or Trade Wars

Before we get into the specific tariff policies and politics, let us share where Stansberry Research stands.

We don't pick a side in partisan debates. If anything, we view all our political leaders with skepticism.

That said, viewed through the lens of markets... we believe the tariffs are bad for economic growth.

At Stansberry Research, we believe that free markets are the key to unlocking the greatest wealth for all. Allowing individuals to pursue trade and profit leads to innovations and efficiencies no other system provides.

Trade barriers, taxes, undue regulations, occupational licensing, and industrial policy all get in the way of the human impulse to build, trade, create, and share.

A tariff is a tax like any other. Taxes distort the most efficient use of capital and lead to what economics calls a "dead-weight loss."

Everyone ends up with less.

We're partial to a parable from Bill Bonner, longtime friend and partner of Stansberry Research. When the tariff news started, he wrote:

Imagine a town that tries to protect itself from competitors. Rather than freely trade with the shoe shop in a nearby-town, it demands a pay-off... It makes the same proposition to the car dealer in the next town over... and with the newspaper in the state capital.

What do you think? Does this town get rich... or does it become a joke?

Politicians throughout history have often promised that tariffs would achieve one-sided victories, but more often than not, everyone shares the pain.

Nonetheless, after decades of championing free trade, the U.S. is now revisiting tariffs as a prominent tool of statecraft...

What Is a Tariff?

Let's start with the basics... A tariff is simply a tax on imported goods. That's it.

Nations implement these taxes to discourage international competition and protect businesses within their borders.

However, as with all taxes – tariffs add costs to both businesses and consumers.

When tariff rates increase, companies have two choices... either absorb the added expense or raise prices to cover the added cost.

From a business standpoint, neither is ideal. Absorbing the added cost eats into corporate profits. Raising prices often leads to lower demand, resulting in lower sales.

Most businesses choose the latter, which means consumers usually end up paying most of the tariffs.

For example, say a grocer in California imports cheap avocados from Mexico. They sell like crazy, while the more expensive California-grown avocados languish on store shelves.

Now, let's say the U.S. places a tariff on Mexican avocados. The importing company would pay this tax... in this case, the grocer. And that would help neutralize the Mexican growers' price advantage.

But critics say that tariffs often miss the target. That's because companies usually find a way to pass costs on to consumers.

That means higher prices, known as inflation...

If you add a tax to goods coming across the border, costs will go up. That's a fact. The question was whether they'd get eaten up by businesses... or passed on to the consumer.

So far, it looks like the latter...

What the Cold, Hard Data Says So Far on Tariffs

The biggest tariff risk for most folks is inflation. And sure enough, tariffs are starting to show up in the "official" data...

Last week, Uncle Sam reported the consumer price index ("CPI") data for June. This benchmark measure of prices rose by 0.3% last month and 2.7% year over year ("YOY"). That's the highest reading since February...

And as always, the devil is in the details.

The consumer price index measures the change in prices paid by consumers for goods and services. Goods can be imported, while services can't. So to see the effect that tariffs have had on consumer prices, we need to look at goods data.

And when you dig deeper, you see that inflation is hitting goods more than services. The very products you'd expect to show inflation from tariffs are showing, well... inflation from tariffs...

Prices for apparel rose 0.4%, after decreasing the prior two months. Home furnishings rose 1% and video and audio products were 1.1% higher. Auto prices, though, were down.

The better, though not exactly great, news... Generally speaking, goods inflation was offset by disinflation in services (like hotels and airline fares), as nonprofit business think tank The Conference Board pointed out today.

So, we remain on "inflation watch."

Consumers are already weary from years of high inflation. And as more tariffs take effect, they'll likely lead to inflation rising even further, squeezing folks' wallets even more.

To be clear, we are skeptical that Trump's trade war is wise. But we also don't pretend to know how it will turn out.

Here's the thing... Economics is about trade-offs.

If you're going to impose a new policy – any policy – there are going to be benefits and costs. That's unavoidable. It's just the way the world works.

And it has always been that way...

A Historical Perspective on Tariffs and Trade Wars

As a group, throughout our history, the political class has done a first-rate job of pursuing policies that generate horrendous unintended consequences...

And no surprise, trade wars have tended to work out poorly for folks on both sides.

Tariffs were part of what was called "beggar thy neighbor" economic policy in the 1930s, meaning a country was attempting to improve its own lot by trying to harm another country... often only making its own situation worse.

Worse still, tariffs have also occasionally led to total disasters that rocked the entire globe.

A trade war between the U.S. and European countries has been widely acknowledged as one of the primary causes of the Great Depression.

And rather than recognizing tariffs' damaging effects, politicians increased them rather than dialing them back. The notorious Smoot-Hawley Tariff Act of 1930 was enacted to protect American jobs from foreign competition. The tariff rate was roughly 60% on thousands of goods imported in the U.S.

At first, it seemed like a success...

Then other countries either raised tariffs on us or started trading with other world powers instead of with us. The result was disastrous.

Overall world trade decreased 66% between 1929 and 1934. Unemployment was 8% in 1930 but jumped to 25% in 1933. Not all of that can be attributed to Smoot-Hawley, but it did exacerbate the Great Depression.

Eventually, the world came to its senses and established the global system of (mostly) free trade and lower tariffs that we've been familiar with for decades now.

The U.S. has been the central cog and the biggest beneficiary of this system. We're the richest nation in the world, with affordable goods and a reserve currency that gives us special treatment around the globe.

But recall the economic framework we outlined earlier... Participants in free trade balance the inputs of land, capital, and labor. America is a leader in land and capital. But globally, we aren't the specialists in labor.

The current shift in American trade policy is trying to appease the working class...

The New Trump Trade War of 2025

According to Trump, decades of trade policies have been terrible for the U.S. and generated gargantuan trade deficits.

As a result, earlier this year Trump declared economic war on the rest of the world by imposing stiff tariffs on imports from more than 180 countries and territories.

The new policy started with a 10% "baseline" tariff on all imported goods to the U.S., regardless of where they come from. ​Then, there were higher "reciprocal" tariffs that are based on the U.S.'s trade deficit with individual countries.

The goal with these tariffs – which, again, American businesses will pay to Uncle Sam on imports from foreign nations – is to "make America wealthy again."

Now, Trump's team has some legitimate gripes. Other countries do have trade barriers that treat us unfairly – particularly China.

The way the global economy works has saddled the U.S. with an extremely valuable currency (for now). That sounds like a good thing – and it typically is – but it does hamper our ability to export and leads to the financialization of our economy.

That's one reason that the U.S. manufacturing sector has suffered in favor of international markets...

The latest populist appeals equate a loss of manufacturing jobs with a loss of jobs in general. However, that's a false comparison. Even without factories, the U.S. unemployment rate is right around 4%.

That's why the potential upsides of new tariffs are targeted at a working class (factory workers) that doesn't really exist anymore.

While manufacturing certain items at home may be important for national-security reasons, for job purposes, we're largely a service economy. And even if the latest tariffs achieve the goal of opening new U.S. factories, they won't provide much of a boost... Most folks already have jobs, and some modern factories have more robots than laborers anyway.

When asked to describe our post-tariff economy, U.S. Commerce Secretary Howard Lutnick explained to CBS News...

The army of millions and millions of human beings screwing in little screws to make iPhones – that kind of thing is going to come to America.

It's going to be automated and... the tradecraft of America is going to fix them, is going to work on them. They're going to be mechanics.

However, a survey conducted last year by the libertarian-tilted Cato Institute shows that Americans don't really want those jobs.

Around 80% of those surveyed said they would be better off if more people worked in factories. But only 25% said that they themselves would like to.

If the shift to a closed, protectionist regime does any good, it will be to some small group of manufacturing companies and workers.

How Tariffs Affect Different Sectors and Markets

The important thing to understand about this dramatic shift in global trade is that tariffs won't affect all businesses the same.

For example, U.S. companies that source a majority of their products from manufacturers in China − and countries with close economic ties to China, like Cambodia, Laos, and Myanmar − will be hit the hardest by Trump's tariffs. That's because those countries are subject to some of the highest tariff rates.

Companies like tech giant Apple (AAPL) and retail behemoth Walmart (WMT) are among those that will suffer the most, as around 80% of Apple's iPhones and around 60% of the goods Walmart sells are made in China.

There's also the fact that not all products will be taxed the same. Cars, furniture, and clothing, for instance, will likely see some of the biggest price hikes since these goods are largely manufactured in countries with the highest tariff rates.

So far this year, we've already seen clear winners, losers, and unintended consequences across the economy...

Manufacturing and Supply Chains: Many manufacturers rely on global supply chains – importing parts, raw materials, or products to assemble or sell. Tariffs throw a wrench in those gears by raising the cost of imported inputs.

Take, for example, a small U.S. wax products factory that used to buy most of its wax from China. Stansberry Research subscriber E.R., who visits various manufacturing facilities as part of his day job, reports...

Prior to tariffs, almost all their wax was sourced from China. Only a small amount was purchased locally to keep a relationship with these suppliers in case of supply disruptions (a good move as it turns out). Initially, the Chinese did not lower their prices to offset tariffs, so they switched to purchasing 100% locally (Exxon/Chevron/etc.). Eventually, the Chinese lowered their prices to offset almost all of the tariff, and the domestic suppliers raised their prices, so they are now getting 50/50 domestic and Chinese.

The biggest loser here was [infrastructure company Kinder Morgan (KMI)]. [The wax business] had been renting several storage tanks from [KMI] to hold their imported Chinese wax. Due to the reduced volumes of imports, they are terminating all those leases.

Automotive Markets: Trump's current plan is that when a car or auto part enters the U.S., the importer must pay a tax of 25% of its value. Most of the time, these companies pass much of these costs on to consumers. Automakers' average 7% profit margin doesn't let them absorb a 25% tariff forever.

And it's not easy to "avoid" the tariffs by only buying American cars. Nearly half the cars sold in the U.S. are built in another country – including popular models from domestic automakers... such as the Chrysler Pacifica van (Canada), Ford Maverick pickup (Mexico), and Chevrolet Trax crossover (South Korea).

Tesla is the only major automaker that manufactures all its cars in the U.S. But U.S.-made Teslas still include imported parts that will face a 25% tax. So do all other cars built here.

The tariffs are particularly bad news for affordable cars. Of the 10 least-expensive cars sold in the U.S., only one (the No. 10 Toyota Corolla) is assembled in the U.S. And American workers build it from a large number of imported parts, including its Japanese-built transmission.

In the longer term, Trump hopes automakers will build more factories in the U.S. Some likely will. But it takes years to plan and construct a new auto plant. These new facilities and highly paid U.S. workers would also raise car prices.

Consumer Goods and Retail: If you're a company selling products to consumers, tariffs can hit your cost of goods like a ton of bricks – and eventually, your customers' wallets.

A clear example is the apparel industry. Many clothes, shoes, and textiles are imported, and businesses reported that new tariff costs were now filtering through to price tags. For a real-world anecdote, Stansberry Research subscriber A.F. writes...

My daughter manages costume fabrication for a large entertainment venue. She orders lots of fabric as well as some already made apparel. Try managing costs when you have no idea what the tariffs will be. It's not like we have American textile manufacturers that can supply the fabric they need to make these costumes. Silk is primarily made in China, which produces about 80% of the world's silk. India follows as the second-largest producer, while other significant contributors include Brazil, North Korea, Thailand, and Vietnam. China is also the largest producer of fake fur and linen. Her suppliers include companies in Vietnam, India and China.

Add the effect of the loss of international tourism due to the administration's hostility toward other countries, and she is faced with a nightmare scenario – rising costs and decreasing revenues. I suspect it is only a matter of time before we see massive layoffs in tourism-related employment here.

Agriculture and Commodities: Farmers often bear the brunt of trade wars. Their products (grains, meat, etc.) are classic targets for retaliation – foreign countries know that hitting U.S. agriculture hurts politically.

In 2025, with China and other nations retaliating, it's happening again. China's response to U.S. tariffs, for instance, included 10% tariffs on U.S. soybeans, pork, beef, and more, and 15% on corn, wheat, and cotton. U.S. farmers either have to eat that price difference or lose market share.

For now, U.S. farmers are watching closely and likely hoping any deals will protect agriculture from being used as a pawn.

Even beyond the farm, tariffs reach into other everyday foodstuffs. Subscriber D.B. described the effects of tariffs in the seafood industry...

I am a seafood distributor who services both foodservice distributors and some local restaurants.

My primary product line is freshwater fish from the Great Lakes, mainly Lake Erie Yellow Perch and Walleye. These products are almost exclusively harvested and processed in Canada, about an hour from the bridge to Detroit.

There is not close to enough American infrastructure to alter this activity. A proposed 35% tariff on a $10 price of walleye fillets to restaurants will now mean $13.50 per pound. This will be very damaging to local small businesses.

Also, I have seen increases on all imported seafood products, such as shrimp, and many others that are only produced internationally.

As we know, tariffs by definition are to "level" the climate if a country is a bad actor to another. However, in this universe, they are simply taxes that I must pass on to my customers... What a lousy way to have to be in business. Sad.

That sentiment likely echoes across many import-reliant small businesses.

Copper: It's worth calling out the recently announced 50% tariff on copper imports...

The metal is so essential that it has gained the moniker "Dr. Copper." The idea is that demand for copper is a fair barometer of economic growth.

We don't yet know exactly how the White House is going to define copper imports. Will it only impact raw, mined copper? Or will it include industrial goods like electrical wiring made from copper?

So, for now, we can't say exactly how it's going to play out or who it will impact the most.

But we do know that the U.S. uses a lot of copper. Last year, the U.S. consumed about 1.9 million metric tons of copper. That put America just behind China in terms of total copper consumption. But only about 1 million metric tons of that was produced here in the U.S. About 900,000 metric tons of copper was imported.

And it would be hard to overstate copper's importance to a developed economy. It's a critical component for just about anything... from electrical wiring, telecommunications, motors, and across the construction industry.

Tariff Winners: So, which sectors win in a tariff scenario? In theory, industries that compete with imports can gain an edge.

For instance, U.S. steelmakers benefited initially when tariffs on imported steel made foreign steel costlier. They could raise their own prices a bit and increase sales domestically. We saw this in 2018: domestic steel prices rose after tariffs, boosting steel company revenues.

Similarly, some textile or furniture manufacturers still in the U.S. might see a bump if imports become pricier and retailers look for local sources.

Logistics and shipping within the U.S. might also pick up if companies decide to source more goods internally... for example, more domestic train/truck activity versus ships from abroad.

And as tariffs raise government revenue, sectors tied to government spending could indirectly benefit if that money is recycled into subsidies or projects.

In summary, tariffs are redrawing the map of economic winners and losers...

Some domestic producers and industries get a temporary shield and might gain market share at home. But many others – importers, exporters, retailers, farmers – feel the squeeze of higher costs or lost markets.

The Next Trade War Deadline Comes on August 1

Folks have so far bought the tariff-sparked market dip with both hands, pushing the S&P 500 Index to new all-time highs.

Markets are propelled in part by a new acronym: "TACO," which stands for "Trump Always Chickens Out." It refers to the way Trump backed off on tariffs when he saw the bond market reacting to his policies in April.

The implication is that Trump won't really punish markets with tariffs... The idea is that he'll talk big but won't follow through, so every tariff-related decline is just another buyable dip.

We doubt that's true...

Trump might seem unpredictable, or even like he's chickening out now and then. But we don't count on him backing down.

Trump is determined to reset global trade to make it fairer to the U.S... and so far, he seems to be following a playbook put together by Treasury Secretary Scott Bessent and Stephen Miran, the Harvard economist on his Council of Economic Advisers.

Trump knows neither his presidency nor the Republican majority in Congress will last forever. He'll keep talking big, taking drastic actions, backing off, then reapplying pressure, negotiating... whatever he thinks he needs to do as events unfold.

Trying to predict what'll happen next is folly.

And fortunately for investors, it's unnecessary. All you need to do is prepare for a weaker dollar... and for mediocre-to-poor returns in U.S. stocks by diversifying your holdings into high-quality stocks from developed countries outside the U.S.

If you do just that much, you'll be miles ahead of most investors.

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