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Speaker 1: Hi, I'm Stacey Hyde
and I'm back for another episode

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of Better Financial Health in
15 minutes or less, and today

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I'd like to talk a little bit
about tariffs and about why they

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are causing so much mayhem in
the markets, causing prices to

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rise, and how the stock market
has reacted.

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You know, negatively,
positively, and what's going on,

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and, as anything that might be
said about future performance in

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the market, I'm going to make
some statements.

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But I don't know, and, quite
frankly, none of the talking

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heads on TV or the radio or any
podcast, instagram, tiktok,

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nobody really knows.

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It's all an educated guess, but
what we've seen this week and

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by this week I mean the week of
April 21st through the 25th

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we're sitting right in the
middle of it.

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As I record this, markets were
down a lot on Monday and the big

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sort of impetus for that was
President Trump saying that he

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was going to fire the Fed
chairman, jerome Powell.

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And the reason the markets
reacted so negatively is the Fed

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has always kind of operated
independent of politics.

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Yes, the Fed chairman is an
appointed position, but then

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they're really sort of insulated
and they make policy decisions

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based on a couple of things One,
they're trying to maintain full

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employment, and then they also
are trying to prevent inflation

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Because, as we are all very well
aware right now, inflation

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causes the cost of goods and
services to cost more and your

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savings to be worth less.

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So inflation is generally bad
when it comes to the cost of

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goods, and so that's a dual
mandate that the Fed has.

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Prior to last year 2022, the
Fed really focused on the full

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employment mandate, especially
coming out of COVID, and

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inflation really got out of hand
, quite frankly, and so the Fed

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has been very disciplined.

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Once they decided that it was a
problem it wasn't just

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temporary they got very
aggressive about raising rates

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and the Fed has continued, with
inflation really picking up, has

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really focused on that more,
and that has angered the

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administration because, with the
tariffs, one of the concerns is

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it's going to raise prices to
consumers, because a lot of the

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reason that things are imported
from other countries or

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manufactured in other countries
is because they can be done less

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expensively, even after
factoring in shipping costs,

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than if they were manufactured
here in the US.

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Or in some cases, they can't be
manufactured here Think or not

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currently and it would take many
years to build the factories to

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do it.

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Think semiconductor chips,
making clothing, that sort of

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thing would be very difficult
for those to be made in the US.

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You also have sort of a friend I
was talking to.

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She imports food goods and she
was saying that you know they

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need a lot of little tangerines
for school lunches and that sort

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of thing.

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She's like we can't grow enough
of them here in the US and so

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there's things like that.

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Sometimes it's climate,
sometimes it's just not enough

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people to work the fields or
enough real estate to plant as

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many different crops as we need
to grow the things we need to

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consume and to have healthy
diets.

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So that factors into it as well
.

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So there's a lot of reasons
that we don't get everything

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from the US.

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Do I think that it would be
better if we did make more stuff

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here?

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Absolutely.

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But if you look at the auto
industry for one, many cars are

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manufactured here, you know, put
together.

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We were just last week we were
down in Mississippi and there's

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a huge Nissan plant and they
assemble a ton of Nissan cars,

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which is a Japanese company but
they're putting it together in

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the US.

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But pieces of that car, you
know, components of the engine,

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components of the seats, some of
those are coming from Mexico,

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some of them are coming from
Canada and then they all come

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together to make a finished
product in the US, and so I

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think that's where people have
gotten understandably nervous

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about we can't make all of these
parts, and it made more sense

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to sort of spread out our supply
chain where we could do it the

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lowest cost, because that, quite
frankly, kept the cost to

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consumers lower.

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So that's really, I think, got
the markets worried about

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inflation and the Fed worried
about inflation.

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The administration wanted rates
to be lower, because then that

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keeps the perception of cost.

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So the houses, like they were
several years ago, the houses

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might cost more, but because
interest rates were lower, the

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cost of financing it was lower.

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So if costs go up and rates
stay the same, payments continue

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to go up and people are feeling
the pinch, like most people are

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right now.

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So there's you've really had
the administration at

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loggerheads with the stock
markets, which are, you know,

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making reasonable guesses about
what they expect to happen, and

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also the Fed kind of looking out
for all of us, trying to make

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the best decisions they can,
with imperfect information as

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well, and so that angered the
administration.

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There was a threat, a perceived
threat, by Trump to fire Mr

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Powell and over the last couple
of days he has walked that back

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and said he's not going to do
that.

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The markets have reacted very
favorably to that and they've

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really kind of picked up if not
almost all of their losses from

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this week.

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But we continue to be
significantly down certain

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sectors more than others this
month, and understandably that's

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got people worried.

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Do we know how this is all going
to play out ultimately?

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No, some people guess that it's
all a negotiating tactic.

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Some people say that you know
they're committed to it.

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But what I personally hope
happens is that it does spur

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some companies to start doing
more here.

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But and maybe we have some very
low tariff and we maybe exclude

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our friends you know, like
mexico and canada, that we share

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a border with and where we have
all benefited from some free

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trade there and maybe add in
some small tariffs on countries

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that also charge tariffs to us
and that could potentially be

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seen as taking advantage of the
US.

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But I don't think these
draconian, dramatic tariffs are

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ultimately going to be good for
the economy.

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There's all kinds of different
opinions out there about what

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the negative consequences are
going to be of that, but in all

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cases, a tariff is another form
of tax and ultimately, I believe

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, it'll be paid by consumers
consumers and so that is going

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to raise the cost if they're not
mitigated and mitigated soon,

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because markets don't like
uncertainty any more than you or

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I do.

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So I don't know that I've
answered any of your questions,

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other than just trying to lay
out what's out there and why the

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markets have reacted so crazily
over the last few days and why

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things tend to jump one way and
then the other Markets are just

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reacting or overreacting to news
.

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So try to stay calm.

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Do not get caught up in the
noise of the day-to-day, because

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the way it's going right now
it's likely to change tomorrow.

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So, um, the old stickers used
to say stay calm and carry on.

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This has been another episode
of better financial health in 15

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minutes or less.