Update Economic Turmoil May 22 1955

Gremlins in the markets  Pulling to and fro

Well, I guess economic fireworks is an appropriate term for the last few months here in America. And what happens in America definitely does not stay in America.

At least in the case of what we do economically. 

Operating under the belief that the U.S. has been taken advantage of for years if not decades as it pertains to imports and exports, Trump took office and immediately went about attempting to remedy the shortfalls by implementing tariffs on a variety of trade partners, goods and services.

Exports are products we sell to other countries and imports are goods and services we buy from other countries.

Tariffs are just a tax on things coming into a country from another country.

One would think country A just sells to country B for whatever the price is and be done with it.

If you don’t like the price, don’t buy. Its not rocket science.

But in the grand wisdom of the bureaucrats, and for a variety of debatable reasons, a government will put a tax on incoming (imported) goods.

Whether it be to garner more money for the government or make stuff made overseas more expensive so people will buy things made locally, the tariff money all goes to the government and not to the people.

Economically speaking, tax credits to local businesses, instead of tariffs, is the better way to go and has been argued by this analyst many times over. Tariffs just make things more expensive to all concerned.

Then you get into the tit for tat tariff wars that are plaguing us now. Country A taxes country B’s products, then country B retaliates and taxes Country A’s stuff.

Ad nauseam, rinse and repeat.

It can turn out to be a game of chicken as to who blinks first and the person with the biggest cojones usually wins those types of contests.

Meanwhile, as the game escalates to its conclusion, the consumer pays the price.

Literally.

The goal, theoretically, is to level the playing field and bring more into balance the trade between the two countries.

That’s assuming there was an imbalance in the first place.

Whether it has been because of decades of bad decisions or just the natural progression of trade between economically different countries, it has been argued the playing field has been notably unbalanced for the United States for many years and that Trump is simply trying to level it to the benefit of American companies and the American consumer.

We may never know the details of such arguments and will only find out sometime later if the end result has the desired effect, which is to make life better and more affordable for the rest of us.

For now however, I am of the opinion this is just another in a long line of reasons inflation is not going to go away any time soon.

That, in turn means interest rates will remain elevated and the markets will continue to be turbulent, directionless and unpredictable.

“Watching the markets so you don’t have to”    

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(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)    

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com