It is Wednesday as I write this note, and the market has been a little nutty. Some find it disconcerting; to us, it’s business as usual. Ok, maybe the volatility is higher than the norm, but we have been through it all in the last 36 years in this industry; however, considering the market slide over the last two months, I decided to start taking advantage of the downturn.

It can be a tad unsettling when markets slide. We see our portfolios go down, and that doesn’t make any of us dance for joy. As I read the news and listen to our clients, the biggest concern we are hearing seems to be surrounding tariffs. This can be “tariffying” …

In light of that concern, I thought I would share my tariff viewpoint. I am a capitalist who doesn’t like tariffs or any other tax for that matter (understanding that some taxes are necessary, that doesn’t mean I have to like them). All corporate taxes tend to be inflationary; the end user ends up paying the bulk of the tax in the form of higher prices which tends to be a headwind to the economy.

This current round of tariffs will likely end in one of two ways.

1) The countries that charge high tariffs will lower those tariffs in order to get the US to reduce their tariffs. This could result in a fairly rapid recovery.
2) Other countries, including the US, will begin to produce products to compete with high-tariff countries. If those countries don’t reduce their tariffs, it is likely to take longer for us to see recovery. It will take time for other countries to build the infrastructure needed to produce the products in question. Additionally, it is possible that this would cause inflation pressure to continue. The tailwind for the economy could be that there are more jobs available here in the US.

My hope is option 1 – we will see lower tariffs across the board. In order for that to happen, we will have to be patient. However, the most likely scenario is that we will be somewhere between the two options – many countries will reduce their tariffs which is great for both them and us. There will be a few holdouts creating an opportunity for our country, and others, to grow their manufacturing capacity, this will take time.

In the meantime, we will take advantage of the recent slide and buy some more of the things that go down the most. This combined with the portfolio changes that we are putting into place should put us in a good position when the markets do fully recover and minimize the pain in the meantime.

As always, we are here for you if you need us.