More Tariffs & Navigating The Truth About Its Impact on You
THE BIG THING I WANT YOU TO KNOW:
Regardless of your political opinion, it’s clear that tariffs have an impact on the markets and on you. So what can you do to prepare? You can’t control the volatility of the markets, but you can create a plan centered around things you can control so that you’re ready for the volatility. Instead of being reactive, be ready.
Friday was a big day! The president announced that if Mexico doesn’t take direct action to halt the inflow of migrants coming through to the U.S., we will levy up to 5% tariffs on $360 billion of Mexican imports. In response, the markets dropped.
If you don’t already know, tariffs are import taxes, and this would be the largest round of tariffs enacted under President Trump thus far. WOW! Take note.
A little side note: My clients spread all across the political spectrum. I try my best to stay “apolitical” because money has no political bend, but what the government does deeply impacts monetary policy, your 401k, rules around retirement plans, estate planning, taxation, etc. All of that impacts your financial planning, and you need to understand how it’s going to impact you even if you agree/disagree with the policy. Okay, back to the regularly scheduled program.
Tariffs have been a massive issue in the U.S. from the outset, and central to this Current group of leadership.
Remember no taxation without representation? The Boston Tea Party? A lot of the angst of our founding fathers was triggered by the British charging import taxes on tea. It caused all kinds of frustration.
The confusing thing about tariffs is the idea of a trade imbalance. I think Ben Shapiro explained it best when he said there’s a trade imbalance when you go to the grocery and buy an apple. You bought an apple, but they didn’t buy anything from you. Are you angry about that? No, you’re fine with it because you received something in return for what you paid. You got the apple—that’s a free market.
Trade imbalance doesn’t mean the U.S. is getting screwed over somehow, it means that we are choosing to pay for goods from another place where they are less expensive.
It gets problematic when we start putting on layers and layers of tariffs because, well, who’s paying the tariffs? We are!
Here’s exactly what’s happening: If you’re buying a good coming in from Mexico, you’re paying 5% more than you normally would. You and I. The idea is that we don’t buy Mexican goods and that’s what hurts them in the end, but it hurts us too because we live in a globalized economy!
Regardless of what you think about tariffs, you can see that they impact the markets. I tend to think tariffs are not a good tool to use, and you might disagree with me, but the reality is that they have an impact. Know that at any point you can ask our team a question about how your personal financial planning is being impacted by recent tariffs.
what can you do about the impact of tariffs?
I would say to you, my dear friends, have you watched the last year of market volatility? Do you expect that to continue? If the answer is yes, shouldn’t you build a plan that’s ready for volatility? Even if you don’t agree with tariffs and the volatile market, shouldn’t you still build a plan that’s ready for it? You may not have control over the market itself, but you have control over how you structure your plan to prepare for the volatility of the market.
My point here is this: please leave your politics at the door when it comes to creating a financial plan and building and preparing for your future. It shouldn’t matter whether you like the president or not, you need to look at what he is doing. If what we’ve seen over and over is volatility in the markets due to the threat of tariffs, then we better be planning for that!
So, is your financial plan built for market volatility?
what does a volatility-ready plan look like?
The question is not about what the market is going to do next, which you have no clue of, but what you can handle when change strikes.
What age are you?
How close are you to retirement?
How much risk can your investments handle?
These are the top questions our Dynamic Money team uses to assess your ability to handle market volatility and determine how YOU and YOUR PLAN need to be structured.
The number one thing you can do is stop watching financial news, turn off the tv, and figure out where you are in terms of your long-term plan. It’s not about predicting the market, it’s about knowing your own situation, which you can control.
One of the neat things about financial planning is that I’ve gotten to shift peoples’ focus from, “What do you think the market is gonna do?” to “What is my situation and what can I do so I’m ready for whatever the market does?” It’s a HUGE mind shift. If you are reactive to the market, then you will never keep up because none of us know what’s going to happen. But you can flip that and figure out what you can control.
Do you have a plan like that? Or are you planning reactively? If the answer is the latter, there is a better way!
When you build a plan that’s centered around you, your circumstances, and the things you can control you’re ready for whatever the market throws at you.
If you’re interested in the benefits of creating a plan like that but you don’t know where to start, we’d love to help you figure that out. Sign up for a free consultation, ask us a question, or start to get our daily financial updates see if we are a good fit for you.
Then we can start building a customized plan that’s centered around your circumstances and is ready for anything. Tariffs? Not a problem when your plan is built to handle the volatility around them.
What one food item would you choose to be free forever?