Market Update for April 9, 2025

Like most of us, I am quite frustrated with what I see coming out of Washington the past couple weeks, especially as it relates to the pending tariffs that are about to be enacted.  I went to college and grad school for about 6 years, and have degrees in Economics and Investment Management.  I can recall about 30 mins of total tariff discussion in all of my classwork.  “Ok, tariffs don’t work, you’ll probably never deal with them in your lifetime substantially, but here is the Ivory Tower view of why they don’t work…”  That is what me and anyone else with my educational background received as “tariff training.”  

The pending tariffs can only be interpreted one of two ways, or I suppose some combination of the two:

1. They are real, and will be on indefinitely, leading to an eventual increase in domestic manufacturing and a reset of global trade parameters.
2. They are intended more as bravado, will be short-lived, and are meant to scare other countries into reworking trade deals in the favor of the U.S.

If it is #1, that is a disastrously difficult, painful notion, and if it were to work it would take many years.  (Given that Trump has under 4 years remaining as president, I do not see how this CAN work).

If it is #2, that is plausible, and the stock market and economy would be expected to fall and recover in some version of a “V” formation on a graph (the depth and timing of said “V” being unknowable).

The scariest times in the stock market are when the structure is changing or seems to be changing.  That seems to be what’s going on now- but said structure change is so manually constructed, that it can be deconstructed in a very short time-period.  COVID-19 was an outside shock to the system- this one is an INSIDE shock.  This administration seems to think that all trade deficits are bad things for a country, but that isn’t the way trade works.  If I go to McDonalds I have a trade deficit with them- I am buying food there for money I’ve made elsewhere, and McDonalds is trading their food for my money.  We can BOTH be happy.  McDonalds doesn’t need to come to eat in MY kitchen to even things out.  And certainly, I don’t need to put tariffs (IE higher prices, like an extra tax) on the fries that the rest of my family might buy from McDonalds.  This is unfortunately a pretty close real-world analogy to what we are doing.  All I can say is I hope between the two options above this is a largely  #2, because if not, what is currently being implemented is borderline nonsensical.