Trump’s Tariffs have kind of thrown the stock market into a bit of disarray. A lot of the people we’re meeting with right now are asking us about the Tariffs. What our Tariffs? How are they going to impact us? And so I thought we’d kind of kick the show off talking a little bit about exactly what Tariffs are, what they do, what they’re intended to do, and then how we will see that impact us as individuals.
So a Tariff at its most basic function is a Levy. The government places a Levy or Tax, if you will, on goods that are imported into the country. So let’s say you’re you’re a widget manufacturer. So you buy steel from, well, China has been in the news a lot, so let’s just pick on China. So you buy your steel from China. You pay, for example, $100 a foot for steel. Then the government comes in and says, well, we’re having this trade situation with China, so while you’re normally paying $100 for your unit of steel, now you’re going to pay $150. $100 goes back to whoever you’re buying it from in China, and then the other $50 goes to us, Uncle Sam.
Well, now that that company that bought that steel, they’re cost of goods is 50% higher. So they have two choices: Either absorb that into their profit margin or pass that cost on to the consumers. And most companies are anticipated to pass that on right along to the consumer. So that means we are anticipating seeing higher costs for anything that comes in from outside the country.
And so, an announcement earlier this week or last week (April 2, 2024) the White House laid out these Tariffs they’re going to be placing on virtually every country around the globe. Rates from 10% for a lot of countries, other countries are getting higher rates.
Breaking news as we’re recording this is that China is facing a 104% Tariff rate. So anything that comes in from China is going to cost a little more than twice as much as it normally would. And it’s widely expected that that’s going to impact all of our wallets in the form of higher costs when we go to buy things.
In fact, I was just reading a news article talking about iPhones, because a lot of iPhone production takes place in China, and it is expected that the cost for your basic iPhone is going to go up. And then nobody really knows how much, because quite frankly, Apple hasn’t said anything. When asked, they’ve been silent about it, but it’s expected the cost for something like that could in fact triple as they deal with where all these different things come from.
And knowing these Tariffs are coming is then throwing the stock market in disarray. We’ve seen over the last several days (April 2, 2025 – April 9, 2025) a drop in the market on par with when Covid was raging and we watched the market value evaporate over a matter of a few days. That’s how the market is reacting to something like this, in part because they know what’s going to happen and then part out of fear of they don’t know what’s going to happen.
And so we’ve got to marry those two things together and try to piece out an economy to move forward.
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