You can’t turn on the television, radio or browse the news headlines without being confronted by commentary about China, President Donald Trump's tariffs, and retaliation kicking off an all but certain global trade war. It’s all too much doom and gloom for us, so we thought we’d join the conversation with a less sensationalized perspective.
Refresh of the Basics: What is a Tariff?
Tariff is just another word to describe a tax imposed on imported or exported goods. For goods imported into the US from other countries, the tariff or "import duties" are collected by Customs and Border Protection.
There are several reasons the US government may choose to impose tariffs:
Of course, tariffs can have negative considerations as well:
What should you do?
Ignore the pundits. No one can predict the impact these new tariff threats will have on investment returns. It’s impossible for us to say what’s going to happen next. We still don’t know:
Ignore the market’s tariff tantrums. Over time, corporate earnings drive market movements. We see no definitive evidence at this time indicating these threatened tariffs will impact earnings in a significant way.
We’ve structured long term plans for our clients to avoid irrational decision making in response to financial news such as this. So, do nothing and let’s stay the course.
If all this ignoring and doing nothing is making you crazy; take up yoga, or running, or call us to meet and review your financial plan. We’d be delighted to hear from you.