Biden and Trump’s Tarriff Policy
Both presidential candidates have specific proposals for tariffs on trade with foreign countries. What does that mean to you?
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https://calendly.com/stevewershing/inquiry
Full Transcript below:
00;00;00;00 - 00;00;27;05
Unknown
Welcome back to 30 Minute Money. It's the podcast that delivers action oriented, smart money ideas and bite sized pieces. I have Steve Wershing with me from focused Wealth Advisors in the ROC Vox Studios just outside of Rochester, New York, and you can have throw down about, tariff policy. That's right. Yeah. The guy in here I've been dying to hear this information.
00;00;27;08 - 00;00;42;10
Unknown
Yeah. Well, so I, I figured, you know, I said a couple episodes ago that, you know, it's probably not a good idea to talk political, but I'll talk political. So this time, we're just going to throw the gantlet down and just go full on, just to go for it. But actually, in all seriousness, this is the kind of stuff that I really want to learn more about.
00;00;42;12 - 00;01;08;14
Unknown
Yeah. And the best thing about this podcast, I have to say is that you break it down in a way that even I can understand. So I appreciate that. So we're going to talk about, trade policy. We're going to talk about that. They have the audience just went to sleep. Sorry about that. but we're going to talk about, about tariffs because tariffs are back in the news and we're going to talk about what that means to you as a consumer.
00;01;08;16 - 00;01;40;25
Unknown
so, President Biden just just announced, in May that he is imposing new tariffs on China, covering electric cars, solar panels, steel and aluminum. And we know that, this is, you know, so Biden is just signing these tariffs into law. And we know that, Donald Trump is is saying that if he gets elected, that he's going to put a 10% tariff on everything coming from other countries and China's cases, they're going to put tariffs of 60% on those things.
00;01;40;27 - 00;02;05;09
Unknown
So we'll show those other countries we're going to you know, we're going to really punish them anyway. But I wanted to talk about this because I think there are a lot of misconceptions about that. And the biggest one, of course, is is that, you know, it's it's against those countries and not against you. And, you know, the truth is that tariffs are bad for you and they're bad for the economy.
00;02;05;12 - 00;02;22;07
Unknown
And so I just wanted to dive into that a little bit and talk about what they are and how they affect things, because I think the more people understand about it, the more the better they'll understand, you know, what they mean to them and how they may even vote. So first let's talk about what is a tariff. So a tariff is a tax.
00;02;22;10 - 00;02;57;24
Unknown
And so as you know, I'm opposed to all new taxes. I think we pay way too much tax to start with. And so if we if we put tariffs on, on any kinds of products, all we're doing is coming up with a shiny new tax that we can use to make people worse off. And, and the way a tariff works is if you put, if you declare a tariff on some particular kind of a product or a particular country, then when those products come into the country, there is there's an extra tax that's put onto those things before they get passed along.
00;02;57;26 - 00;03;26;05
Unknown
And so the biggest misconception is that it punishes the trade partner. And in some small way, maybe it kind of does a little bit in, in in that by making something more expensive, people will buy less of it. So if they put a tariff on Chinese electric cars, then chances are they're, you know, they will sell fewer Chinese electric cars here because other cars will be more cost competitive.
00;03;26;08 - 00;04;00;14
Unknown
But it's not like China's paying that tax. It's not like China's paying that tariff. The consumers paying the tariff. So what you really want is a Chinese electric vehicle. You're the one who's got to pay for it. That's what I always I always thought that was strange. I mean, I kind of I get where it's coming from. I get it's the, you know, look after our own, manufacturing and that kind of thing, but it's also sort of anti-choice in a lot of ways, because it is the consumer doesn't have that choice anymore because now they've just made that product completely out of reach.
00;04;00;15 - 00;04;35;21
Unknown
That's exactly right. That's exactly right. And so, you know, and so the net effect is that it just makes things more expensive. Yeah. And so, you know, maybe they will buy something American instead. Maybe they'll just buy something different or they won't buy it at all. So you know, the the studies that have been done, you know, the idea is that they'll make, just like you said a minute ago, it'll, it'll it'll make things, it'll make it, it'll it will enable us manufacturers, U.S. companies to be more competitive, to compete more effectively because it makes the other things more expensive.
00;04;35;24 - 00;04;57;22
Unknown
but most every study that's been done, has shown that that's not actually what happens. It just it's bad. It decreases growth. It decreases employment. It you know, it makes things more expensive for people. And so they they do less of it. So the National Bureau of Economic Research showed that it has a net negative effect on employment.
00;04;57;22 - 00;05;18;22
Unknown
So if what you're doing is trying to protect US jobs tariffs don't do that. You might protect jobs in a particular industry, but they're going to get lost someplace else because the net effect on overall employment is negative. And this and what do they do with that with that that tax money that revenue that comes in. They do all the things government does all it on $400 toilet seats.
00;05;18;27 - 00;05;36;22
Unknown
There was a thing on the onion a bunch of years ago where they where they talked about, you know, the government has a crisis because the big hole in the desert, they pour all that money into, it's filling up and now they've got to get a new hall. So, so true. So it just goes into the government coffers.
00;05;36;22 - 00;05;58;17
Unknown
It's just another source of government income. So it's just a different way of taxing us. Yeah. Now, now if they know this probably doesn't make any sense, but I'm just thinking off the top of my head. If they took that tax money, that from that tariff and they put that and they invested into American companies and tried to expand American companies in their jobs and things like that, I don't know if that's even possible, if that's a thing that can be done.
00;05;58;19 - 00;06;15;14
Unknown
But it seems like in my mind that would be a better way to spend that money than to just throw it in a hole in the desert. So we'll have another episode about government subsidies for for different businesses that. So that's a government subsidy. Really bad too, right? That's a government. So you want the government to buy pieces of companies and that's even worse.
00;06;15;15 - 00;06;38;24
Unknown
Well, so maybe not buy companies, but like say invest in, you know, create advertisements that, that bolster buying U.S. products or some kind of ad campaign or, I don't know, something like that. So you're smiling at me. So I know I, I just I just read an article. I just read an article last week about that. They have finally disbanded the UST board.
00;06;38;27 - 00;07;09;17
Unknown
So back in the, a if back in the 19th century, they created this thing because what they discovered was that, Britain was keeping all the good tea for itself, and they were taking the stuff that was barely drinkable. And they said, well, we'll just sell it to the Americans. And so they established a board of people who would taste every tea that came into the U.S., and they would have to give the approval for that tea to be sold in the U.S..
00;07;09;20 - 00;07;33;17
Unknown
After maybe a couple hundred years, they finally been able to disband that thing. Was it still operating? There were people still tasting tea. They were still tasting tea. All that stuff was so technically they disbanded it in 2015, but they were still funding it until September 23rd of last year. That was a job that I could have had.
00;07;33;22 - 00;07;52;27
Unknown
It's right. It is. Well, depends on how good your taste buds were and if you could pass whatever arbitrary test they made up for it. So here's the thing. So so to your point, we have we subsidize the marketing of milk. We subsidize the marketing of orange juice. We subsidize the marketing of cotton. We said we do it.
00;07;53;00 - 00;08;15;02
Unknown
What's the it does no good. Hey, who out there doesn't know what milk is, right? Why is the government promoting that stuff? I mean, if you're in the milk business, then part of your budget ought to be promoting whatever you perceive as the benefits of milk. It shouldn't be the government's job. Right? Right. That's that's the problem with that.
00;08;15;02 - 00;08;36;16
Unknown
And the and the bigger problem with it is that once you establish it. And this is why I talk about the tea board, once you establish it, it's essentially impossible to make it go away. Right. They've been trying to make this thing go away for better than 20 years, and it's taken focused attention from some of our legislators to just beat this thing down until it finally died.
00;08;36;18 - 00;08;55;00
Unknown
That's crazy. We need those people to be doing real work, you know? And if it takes that kind if that if it takes that kind of attention on the part of a couple of congressmen to to get rid of this stupid thing that everybody knows has no value, then you know, what about a program that sounds like it might actually be worth something, right?
00;08;55;03 - 00;09;18;08
Unknown
Right. So, so they have a logger board or a stout board or some kind of a board that tastes fear from other countries. I think you should apply the. No, I think I me, but I think other creatives. Yes, I used to, I used to own that business, but I don't do that anymore. Yeah. So so, you know, rather than figuring out how to redirect those kinds of money, just a different things.
00;09;18;08 - 00;09;40;24
Unknown
You know, I think that the money should, should be in the hands of consumers to make decisions that they want and not to be taken away by the government to, to for the government to decide how they want to spend it as opposed to consumers. Yeah. You know, we just we talked a couple episodes ago about, you know, millennials and Gen Z having bigger issues with credit and bigger issues with being delinquent on their credit.
00;09;40;24 - 00;10;02;29
Unknown
Why don't we just let them keep more of their income so that they have a little easier time making it in this world? That would be that would be my idea that is a good idea. So I like that idea. Anything I can do, that's that's why I'm so passionate about this, about my job, is because anything I can do to cut people's taxes, anything I can do to starve the beast, I'm all over.
00;10;03;02 - 00;10;25;01
Unknown
All right. So that's what. That's what it's all about. So. So the next question, of course, is, well, if all the all of if these dozens of studies demonstrate the tariffs have a net negative effect on trade and on the economy and unemployment and on pretty much everything, why? Because it gets votes. Because it gets votes. Because people don't, because people don't understand what it really does.
00;10;25;01 - 00;10;45;17
Unknown
People. Because economic literacy is not that widespread. Because people think like I was just thinking a few minutes ago exactly that the government, the government doesn't look at studies to figure out what works. And, you know, I mean, it would be you know, it would be interesting if if the rank and file, you know, people just randomly picked up economic studies and read them.
00;10;45;17 - 00;11;04;18
Unknown
But, I mean, that's just not realistic and that's not how. Yeah, it's not a good use of most people's time. So I just want the government to get out of that business. And the more people want to learn about financial, you know, about how to manage finances and about the economy, I'm I'm all for it. But I don't think that the government should be doing things against their interest if they don't do that study.
00;11;04;21 - 00;11;29;03
Unknown
So, you know, so anyway, the, the practical effect of that is as they increase tariffs, we should get ready for lower economic activity, we should get ready for lower, employment. And we should also take a look at what things are being, you know, or having tariffs applied to them because those are the sectors of stocks that may suffer the most in the near term.
00;11;29;03 - 00;11;49;24
Unknown
So now both both sides of the political spectrum are for tariffs. Am I correct. It's just how much. Yeah. It's just how much of it okay. Yeah. Yeah. Exactly. so and that then that's kind of a change I think that generally Republicans used to be against tariffs. But now, you know, everybody's for more government income and more taxes and more tariffs.
00;11;49;24 - 00;12;20;10
Unknown
And so not that much difference from that standpoint between the two parties. The so, you know, the way you respond to it as, as a consumer, as an investor is just make sure that you're broadly allocated across different sectors of the economy and across different countries so that whatever, you know, whatever effects these tariffs have, you're going to mitigate some of the potential damage to your portfolio by being diversified across those different areas.
00;12;20;12 - 00;12;55;05
Unknown
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Unknown
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00;13;16;20 - 00;13;45;27
Unknown
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00;13;45;29 - 00;14;05;14
Unknown
All right well I was just taken back to school on tariffs Steve what's your 30 minute action I know 30 minute action item is check your allocations. Make sure you're diversified across economic sectors and countries. All right. There you have it 30 minute money three zero minutes money. Find us on all the podcast platforms and we will catch you next time on 30 Minute Money.
00;14;05;14 - 00;14;24;13
Unknown
Thanks.