Why Tariffs Shake Up Markets and What I'm Doing About It

1. Tariffs create uncertainty that disrupts global supply chains, raises costs, and triggers market sell-offs.

2. Overvalued markets are more fragile, making them prone to sharp drops when negative surprises hit.

3. The U.S. trade deficit is a real concern, but broad tariffs are unlikely to solve its root causes.

4. Despite short-term pain, the U.S. economy is resilient, and history shows it recovers from major shocks.

5. Market dips can create opportunity: buying strong companies like $GOOGL ( ▼ 1.74% ) and $UBER ( ▲ 1.26% ) during volatility can pay off long term.

Why Markets Hate Tariffs

When the government puts tariffs on imported goods, it's like adding a tax that makes things more expensive. Businesses have to pay more for materials from other countries, and they often pass these costs to us as customers. The bigger problem? No one knows exactly what will happen next. Companies struggle to make plans when costs suddenly change, and investors get nervous about future profits. Many decide to sell their stocks, causing markets to drop.

High-Flying Markets Can Fall Harder

I've warned you before - when stock prices are really high, they're like a balloon filled almost to bursting. Recently, our markets were hitting record highs with everyone feeling good about the future. But when markets are this optimistic, there's not much room for bad news. When something unexpected happens (like these new tariffs), prices can tumble fast. That's exactly what we saw this week - a quick and painful reminder that what goes up can come down.

Trade Deficit Is a Real Issue

America buys more stuff from other countries than we sell to them. This "trade deficit" means we're sending lots of money overseas instead of spending it here. Some worry this costs us manufacturing jobs and makes us too dependent on other countries. The current administration thinks tariffs will help fix this by making foreign products more expensive, hoping we'll buy American instead.

Tariffs Often Backfire

The idea behind tariffs sounds good - protect American businesses. But here's the catch: many American companies need parts and materials from other countries to make their products. When tariffs make these materials more expensive, companies either raise their prices or make less money. And that's not all - other countries usually fight back with their own tariffs on our products. This trade fight hurts everyone, making the global economy weaker.

America Always Bounces Back

Despite today's worries, I've seen America overcome countless challenges. The country has an amazing ability to adapt and grow through tough times. Innovation, hardworking people, and entrepreneurial spirit have always pulled the US through. While these tariffs and trade battles create short-term problems, I firmly believe in America's ability to adjust and thrive.

6. I Bought Google and Uber While They Were on Sale

When markets dropped this week, I saw an opportunity and bought shares of Alphabet (Google's parent company) and Uber. Both stocks fell with the market, but I believe these companies have bright futures ahead. Google continues to dominate online advertising and cloud computing, while Uber keeps expanding its transportation and delivery business. Buying good companies when their prices drop has always been my strategy for long-term success.

7. Stay Calm, Stay Ready

Market ups and downs are normal, even if they're uncomfortable. While tariffs and trade tensions can shake things up temporarily, what matters most is sticking to your long-term plan rather than making panic decisions.

Have questions about what's happening or how to position your investments? Just email us back - we're here to help. And if you found this useful, please share it with a friend who might benefit.

Happy investing!
Josh

The information is provided for educational purposes only and does not constitute financial advice or recommendation and should not be considered as such. Do your own research.