The Cold, Hard Data on Tariffs
Dear subscriber,
In investing, ideology can kill you.
The market has no quarter for your beliefs and preferences – political or otherwise.
You only make money by being right.
Of course, we all suffer from all kinds of biases that lead to hyperbole, wishful thinking, and confirmation bias.
And in recent years, that has only gotten worse...
We seem to live in a world where there's no accepted truth anymore. Depending on what you read, who you believe, or who you've chosen to follow on social media, two different people can live in two very different realities.
But while each person may have their own truths... there are also cold, hard facts.
Facts are irrefutable. They are verifiable, concrete pieces of information.
Truths are a little more subjective... They're based on facts, but also on personal beliefs and experiences.
The market doesn't care about your feelings or your truths. We may see some "animal spirits" every now and then. But over the long term, the market runs on facts.
All this is preamble to my desire to take an unbiased look at President Donald Trump's tariff policy...
Everyone has such strong opinions when it comes to Trump... and few want to listen to anything outside their comfort zone.
That's OK. There are plenty of things you shouldn't be willing to change your mind on so easily, like your core values and beliefs.
But these tariffs matter immensely to your money. And we have real data – concrete facts – that are starting to show the economic costs of these tariffs.
Let's start with a quick recap on where we are with Trump's new trade policy...
Trump has instituted some tariff rates, including a 10% baseline tariff on most U.S. imports, a 25% tariff on imported light vehicles, and a series of tariffs specific to Mexico, Canada, and China. The average effective tariff rate is around 21% today, the highest since 1910.
Now, as the latest "pause" on tariffs runs its course, Trump is claiming some more monster tariffs that will take effect...
For one, Trump is looking to set higher reciprocal tariffs on Bangladesh, Japan, South Korea, and several other countries. He's also talking about placing tariffs on pharmaceuticals and semiconductors.
It stands to reason that whatever effects we've already seen from tariffs will only accelerate from here.
The biggest immediate fear with tariffs was, of course, 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.
Unfortunately, it looks like the latter.
New inflation data out Tuesday showed that the headline number was up, though still tame. The consumer price index climbed to 2.7% in June, up from May's 2.4% increase. That's the highest reading since February...
But 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...
One benefit of Trump's tariffs was supposed to be growth in U.S. manufacturing and related jobs.
But we haven't seen that yet. In fact, the number of manufacturing jobs is declining...
Overall, we're still trying to understand how these tariffs will affect the economy.
Classic economics told us they would bring inflation. And so far, it looks like they have. Any manufacturing benefits, on the other hand, will take longer to materialize. (And if I'm being honest, I don't think they will materialize.)
But 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.
The problem with our political class is... they just can't admit that to voters.
We see this on both sides of the aisle. But the pitch for tariffs is especially egregious.
The Trump administration promises that tariffs will move manufacturing back to the U.S... that they'll generate tax revenue... and that they won't cause inflation. All in all, it sounds like a wonderful policy with no downside.
That's just nonsense. Everything comes with a cost (and we're starting to see that already).
But because our elected officials no longer respect their own voters, they can't even acknowledge the costs or trade-offs that their policies may inflict.
Rather than an open accounting of the pros and cons of this new policy... they try to tell us there are only pros. They think we can't handle the nuance. And they think we won't hold them accountable.
So here's what you do...
Every month, we'll get more and more evidence of the effects tariffs have on the economy.
Watch the data. Keep track of the performance of your elected officials – both the ones you didn't vote for... but especially the ones that you did.
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.
Vote how you want. Follow who you want. But invest for your future. Tariffs matter for the economy. And the economy matters for your portfolio and wealth.
What Our Experts Are Reading and Sharing...
The recent turmoil has been good for banks. JPMorgan Chase (JPM), Wells Fargo (WFC), and Citigroup (C) have all reported better-than-expected profits and revenues. The economy looks strong, but the market's wild ups and downs have led to big gains for these banks' trading desks. And while it's not a particular goal of mine to be on the same side as mega-bank CEOs, they too are sounding the alarm about the importance of the Federal Reserve's independence, as I did two weeks ago.
Nvidia (NVDA) shares have whipsawed back and forth since Trump took office. But recently, they're rising on news that the chipmaker will be able to restart its exports to China. This is a fairly big surprise. The U.S. government had blocked exports to support domestic chipmaking and hamstring China in the AI race. But now, the administration will grant Nvidia – and rival Advanced Micro Devices (AMD) – a license to send certain chips to Chinese customers.
Stansberry Research's own Josh Baylin covered the incredible war for AI talent in yesterday's DailyWealth. As Josh warns, there's a new trend sweeping Silicon Valley – what's called "talent extraction" – and it can be problematic for investors in startups and early tech companies.
Other Media
This week, I appeared on MarketBeat to speak with producer Bridget Bennett. I made a case for foreign investments... and even listed three of my favorite international plays to make today. You can watch the interview here.
As a quick reminder, we broadcast a This Week on Wall Street episode each Sunday morning on YouTube. It'll cover the same topics I do in these pages... but with additional information and guests. Be sure to subscribe so you're in the loop when new episodes come out.
New Research in The Stansberry Investor Suite...
Like most folks, I spend a lot of my time online.
And while we all resolve to look at our screens a little less each day... few of us ever do.
The average adult spends about 6 to 7 hours per day online. That includes time spent on smartphones, computers, tablets, and other devices.
We're projected to spend about 2 hours and 48 minutes per day just watching traditional (or "linear") television.
That's down from 3 hours and 16 minutes in 2021. But we're not necessarily reading more books or getting outside and enjoying nature...
Instead, we're replacing traditional television with digital video.
According to data from market-research company eMarketer, time spent streaming digital video is expected to shoot up from just 3 hours per day in 2021 to 4 hours per day this year.
For those who want to spend less time online, that may concern you. But for investors, this has all the makings of a great opportunity...
Because an increasing amount of folks online sounds like a very, very valuable audience.
And they are... Nearly every streaming platform is pushing to capture more and more viewers. Digital advertisers are chomping at the bit, too. U.S. ad spend on Internet-connected TVs and streaming platforms has more than tripled in the past five years.
This month, the Stansberry Innovations Report team has found a central cog in the digital-streaming world...
It's not Alphabet (GOOGL), Amazon (AMZN), or Disney (DIS). Rather, it's a hidden player in streaming – one that's able to deliver hyper-targeted ads to very specific audiences.
This company's platform reaches 90 million households and claims more than 127 billion hours of viewing time by its customers. Its interface may even be sitting in your living room right now.
As the Innovations Report team writes, "It's a platform, a marketplace, and a gatekeeper for how streaming ads get delivered."
And advertisers are paying up...
This isn't some little startup. It's a profitable company with hundreds of millions of dollars in free cash flow. And as the trend toward video streaming ramps up in the years ahead, this company is likely to keep growing at a strong pace.
Stansberry Investor Suite subscribers can read the entire report here.
If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.
Until next week,
Matt Weinschenk
Director of Research
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