The tariffs applied to trade partners are reciprocal, which means the administration is not simply putting a tariff on a trade partner, rather, they are putting tariffs on trade partners that have put tariffs on the US tax payers that purchase goods from overseas – many of which have been there post-WWII…wasn’t that nice of Europe after we helped them win? Even if the USA has no tariffs on global trading partners, if they have tariffs on our goods, this is NOT free trade, which is why this administration is using reciprocal tariffs to balance the cost of goods.
For example, if a widget produced in China is also produced in the USA, China put tariffs on the USA widget, so that the people in their country will not buy that widget, but will buy the widget made in China. China puts a 35% tariff on the USA widget, and the USA has no tariff on the Chinese widget. In America, with no tariffs on the Chinese widget, the USA widget costs $25, and the Chinese widget cost $20. The consumer wants to buy the lower price widget, and all the proceeds go to China. Now that a reciprocal tariff is put on the Chinese widget, the widget will cost the same or slightly more than the USA widget, encouraging the consumer to buy American, and help American companies grow, create more jobs etc.
China’s tariff has more of an effect on China’s well-being then the USA tariff has on our own economy, so the markets are all emotion and nothing of substance right now. I always said, Wall Street traders are more dramatic than actors on a soap opera, and it appears to never change.
These trade deficits have been ignored by every administration since Franklin D Roosevelt, at least on a large scale. FDR used tariffs to create fairer trade. Alexander Hamilton utilized tariffs when he created the federal financial system as a way to pay for the governments debts. (The income tax did not start until 1913).
The USA is not affected very much by tariffs bc our economy is larger than all the countries we trade with. Canada’s GDP is approximately $2.1 Trillion, whereas the GDP of states like Texas ($2.7 Trillion GDP) or California ($4.1 Trillion), barely rely on Canada at all. We have the upper hand. Even countries like France ($3.2 Trillion) are no match for the USA. Have no fear.
We are in very good footing with the reciprocal tariffs, and the solution is easy. Trade partners simply remove their tariffs on us and allow free trade, or not. If they refuse, the companies move to the USA creating more manufacturing jobs in the US. Citizens of the USA will start buying more goods from America.
Our economists and market specialists at the fund companies we utilize are not concerned at all about these tariffs. They know that this is short term, and in the end, we see even greater growth potential in American companies…because when the world gets rid of tariffs on America, we could possibly see another historic economic boom.
This is a total restructuring of global trade that will keep America as the strongest economy in the world. It will also realign the structure of global trade, remove our reliance on China for certain necessary goods.
Even today, as the media focuses on the markets, job creation has boomed. This means the economy is stronger. Payrolls are increasing. The 10 year treasury yields have dropped, which means mortgages are more affordable, and we could see a further drop in interest rates, lowering inflation. These are all very good signs for the economy.
Don’t forget, tariffs were used in 2016-2020, and they worked. It was directed at certain countries and on a smaller scale, but America saw the highest growth since post WWII.
Stay calm and ride it out.
https://www.zerohedge.com/markets/us-payrolls-unexpectedly-soar-228k-above-highest-estimate
https://www.usatoday.com/story/money/2025/04/04/jobs-report-march-data/82815452007/
https://thediplomat.com/2025/03/vietnam-announces-cuts-to-tariffs-on-us-goods-as-trump-trade-announcement-looms/
Capital Group: Tariffs don’t change us economic outlook:
https://www.capitalgroup.com/advisor/insights/articles/tariffs-dont-change-us-economic-outlook.html
GDP numbers were pulled from Google AI.