Trump’s Tariffs in Effect
Yesterday, President Trump announced his promised, sweeping tariffs on foreign imports into the US, and the world looks very different. He lamented that this is the end of taking advantage of the US and it will be a boom economic period in the US.
Today, investors dumped their favorite stocks of companies that relied significantly on US imports. We get a look at the worst of them below. They’re likely the companies you should avoid investing in going forward.
The quashing of imports by President Trump yesterday, changes the world’s economy dramatically. It’s also the beginning of the re-industrialzation of the US, something that disappeared with Free Trade, which in hindsight has created a $36.6 trillion national debt and a $1 trillion per year trade deficit. That legacy will remain a burden for any government going forward. Trump’s plan is to erode that debt through massive economic growth, where the US becomes the leader in AI, industrial production, banking, and more.
In one action, the world is suddenly awake and sober with their own future squarely in their own hands. They’re depressed and scared, however, many of them will launch new directions that fit their country, doing the kind of business they do want. And for most regular and now grateful Americans, it’s the tariff afterglow with a hope of good jobs, prosperity and a better life.
Still, many Democrats are railing against Trump’s tariffs as dangerous also accusing him of ‘breathtaking sabotage’ against the U.S. economy. Yet what did Joe Biden do with tariffs just last year? So there’s a lot of hypocrisy and misinformation happening with respect to the tariffs and what the final outcome will be for the stock market and economy.
For other nations, taking advantage of the US, it’s a period of big adjustments, overdue but they will manage. No longer will they have to be dependent on one country – The United States. That’s freedom.
Benefits of Trump’s Tariffs
Despite the immediate pain of the tariffs, the goal is long-term gain, including the continued viability of the United States as a nation. Here are the most relatable benefits of the Trump tariffs:
- Attraction of trillions of funds to reindustrialize America
- Rising earnings for US companies
- Rising US stock prices
- Forces other nations to lower their tariffs on the US, thus opening up US exports
- Can lower or eliminate income tax to fund the government
- Protect the development of US companies from foreign predation or advantages
- Grow jobs and wages and revitalizing America’s neglected cities and towns
- More power to control terrorism, drug cartels, and Fentanyl production
- Disrupt and end all Woke governments
- End China’s menacing rise across the globe
- Control the threat of Iran, Russia and other warring countries (sanctions)
Indexes Drop Today, But Shouldn’t it Be More?
Overall, the indexes only fell about 4 to 6% which is surprisingly light given what’s happening. Yet they are selling former favorite stocks for some new ones – an exchange on the exchanges! Money is just moving.
And with clarity and rising performance, a lot of money in the money markets will slide over to risk equities by 2026. They’ll have the FOMO fear thing and will want to get in on those US stocks rising (see chart below).
The response on Wall Street was negative given the Street is all about the US printing money and Americans using that cash to buy foreign goods for massive debts and deficits (to be paid later, right?). They’re all like teenagers who must leave home for the first time and stand on their own two feet. After being hand-fed so long, they lack confidence.
Investment Inflows Will Rocket in 2025
I think soon enough, US investors/hedge funds will be all in on the Pro-US theme, once they find some US companies to invest in. If the Hedge funds don’t fail (Powell is bailing one out now) and they withdraw their massive investment in China, they’ll be joining the party after a long time away from the US. Then their foreign dream of profiting on the China boom will disappear like mist on a sunny morn.
The knowledge that trillions of investment dollars are either returning to the US or there are new infusions, and will be creating new companies including new US-based startups, will begin pulling investors in. Trump pointed out a rush of $1 trillion-plus coming in so far, and now it will be tidal wave of foreign direct investment and flows into US stocks.
Some investors keep pouring money into Gold and gold stocks, a risky choice as its in bubble territory. Oil stocks took a hit today too
Out of all this negativity will come a massive spirit uplift and direction for US companies and Americans as a whole. It’s a time of promising change and may even bring back American’s spirit and psychological health.
Given most of the equities operate on the taking advantage of the US theme, stocks dropped significantly today. Currently the Dow Jones sits at 40,788 a drop of 2.91%, the S&P at 5428 down 4.1%, the NASDAQ is at 16640 lower by 6.24%, and the Russell 2000 (the index no one cares about) down on the week.
So investors did not believe the tariffs would go through as it wasn’t priced in. I did say this was the case before because it was so obvious.
We could go on and on about the reason for the tariffs and whether it’s good for the conglomerates, but it’s best to be calm and wait for the dust to settle.
Democrat media are claiming the end is near, but it’s more foreign countries and companies that are facing tough times. For US companies, this is best time in US history to grow their companies.
Trump isn’t done. His aim is to reduce income taxes and cut harmful regulations. That’s another leg up later.
My prediction for the indexes by year end is:
NASDAQ: 19,100
Dow Jones Ind: 46,900
S&P 500: 6240
Russell 2000: 2200
Much of this growth will happen in the 4th quarter as companies will be having supply chain issues and the economy will experience inflation amidst the economic reorganization.
There have already been massive inflows of investment capital into the US this year, and some anti-US pundits are complaining about too much money in the hands of one nation. Yet, these same pundits didn’t say that when China was pulling in trillions with 10% annual growth. Obviously, that’s all political.
We trust the US with our investment dollars more than any other country and now the US will offer the biggest returns.
Today is an important day, as we get to see what other traders believe are the equities that benefit from the Pro-US tariffs. And Barchart provides a look at which are rising in their charts.
Note Autozone, O’Reilly Automotive (which I pointed out last week), health care stocks, and McKesson Corp. Oil stocks took a big hit as oil fell $6 a barrel, which is excellent for reducing inflation.
The fear of a recession is rising, given the destruction of the old supply chains and severely reduced supply. However, new companies and factories will be built and that will really power up US blue chips on the Dow Jones index.
And to round out tariff eduction, the biggest losers on US markets today include Booking Holdings (travel sector), Monolithic Power, META (down 9%), Hubspot, Nike (down 13%), NVR, Blackrock Inc. Carvana, Service Now, and First Citizen’s Bank. Dell, Shopify, Best Buy, Ralph Lauren, Abercrombie & Fitch, Rh Common Stock, Deckers Outdoor (down 14.4%), Micron Technology (down 16%), Crocs, Willimas Sonoma, Zebra Technologies, Logitech also suffered massive price drops.
As the next week passes, we’ll see investors zero in on those companies that sell products into the US and dump them. Interesting that Nvidia didn’t suffer a big drop (down 7.8%) given their chips are made in Taiwan. Investors still see it as an AI stock haven and that they are building their chip factory here. In the meantime however, they will face a hefty tariff on those imported chips.
Some analysts are suggesting investors take a hold position because this rout may not be over. New economic numbers will arrive in April, May and June. As I point out in the 3 month market prediction report, the next 90 days might be rough.
It will be interesting to see which stocks win the favor of investors going forward because that’s where you want to park some money.
Catch up on more about the US stock market and improving your investment results.
