Thoughts on Trump's Tariffs

Yesterday we were shocked by the market selldown with BTC touching $77k and Hive at 19 cents. The market drop seems to be due to the fresh tariffs imposed by US President Donald Trump. Tariffs might sound like just another economic term, but as we have seen, the effects can reach into our daily lives...and our portfolios.

Tariffs are taxes on imported goods, imposed by countries with the idea of making them more expensive thus protecting local products. Trump's goal is to boost the US economy by protecting domestic businesses from losing to cheaper foreign products. On the other hand, it seems the opposite effect is happening and the selloff on financial and crypto markets is only one of the negative effects.

China has already retaliated with a 34% tariff on US goods and Trump is threatening to impose an additional 50% on China.

Other countries are thinking of retaliatory tariffs on the US as well. As countries start slapping tariffs on each other's goods, it can cause rising prices and inflation. It can also slow down trade between countries, dragging down global growth. Tariffs can be a headache for companies and countries that depend on export sales. They make it more expensive to bring in goods, which raises production costs. The increase in costs get passed on to customers so people end up paying more for goods. Economics taught us the effect of prices on demand: when prices go up, people spend less. This can hurt businesses, including American businesses, and slow down economic progress.

As we have seen yesterday, the uncertainty on businesses brought by tariffs negatively affected the markets. Ironically, that means the average American's retirement account, mutual funds, or even individual stock and crypto values are negatively affected. Tariffs can also cause inflation--increasing prices and decreasing the dollar's purchasing power. While tariffs are supposed to protect domestic jobs and industries, they come with a price. Sometimes that price is paid by the very people they’re meant to help.

Posted Using INLEO