The recent announcement of tariffs is making headlines, leaving many with questions. With that in mind, I thought I would reach out with an overview of what tariffs are, why the United States is implementing tariffs, and how they may impact consumers.

What Tariffs Are

A tariff is a tax placed on goods imported from another country. The company importing the goods pays the tax.

So, for example, if a U.S.-based paper supply company purchased paper from a business in another country, the U.S. paper supply company would pay any tariffs associated with the paper.

The added costs for U.S. businesses are often passed on at least somewhat to the consumer. A 2019 Goldman Sachs analysis showed a notable increase in the costs of goods under the then-Chinese tariffs compared to the overall inflation rate. And many economists expect similar impacts on the consumer if tariffs remain in place.

Reasons for the Recent Tariffs

The U.S. Trump administration cited trade imbalances and national security concerns, particularly the need to address the flow of fentanyl and its precursor chemicals into the U.S., as the primary justification for the tariffs on China, Mexico, and Canada, which are all at varying stages of implementation.

What This Means for You

While these tariffs are designed to encourage domestic growth, they are likely to bring challenges, including:

• Higher consumer prices – Electronics, vehicles, appliances, and even some grocery items may see price increases.
• Stock market volatility – Trade tensions can lead to fluctuations in industries like tech, automotive, and agriculture.
• Supply chain disruptions – Businesses dependent on global suppliers may face delays or increased costs.

What’s Next?

Ultimately, some of these tariffs may be negotiating tools rather than tariffs the president actually plans to keep in place. It’s unclear how many tariffs the president intends to permanently enact.

Right now, the trade landscape is rapidly evolving, with ongoing negotiations and potential for further policy changes. Regardless, amid this flurry of events, it’s important to remember that impulsive decisions are not usually the friend of the long-term investor.

Thank you for reading!

The Trademark Capital® Team

This material is intended for informational purposes only and should not be construed as legal, accounting, tax, investment, or other professional advice. Trademark Capital’s investment strategies are built using quantitative, proprietary algorithms that are designed to identify and react to changing market conditions. However, investors should be aware that no investment strategy or risk management technique can guarantee returns or eliminate risk in any given market environment. As with all investments, Trademark Capital Management’s investment strategies are subject to risk and may lose money. The investment strategies presented are not appropriate for every investor and individual clients should review with their financial advisors the terms and conditions and risk involved with specific products or services. Due to our active risk management, our managed portfolios may underperform during bull markets. Past performance is no guarantee of future results.