Capitalist Investor

Tariffs, Tomatoes & the Truth About Social Security

• Strategic Wealth Partners

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In this episode of The Capitalist Investor, Tony and Derek dig into a hot economic debate: Are tariffs inflationary or deflationary? They break down the political and economic implications of Trump’s proposed tariff policies, explore historical lessons, and discuss which industries are most likely to win or lose.

Then, the guys shift gears to tackle a listener question about the “Big Beautiful Bill” and whether it actually helps retirees. Spoiler: If you’re under 65 or earning over a certain threshold, don’t expect much help.

You’ll also hear some real talk on:

Made in America vs. cheap imports

Why the market isn’t panicking (yet)

Tomato inflation?!

Who actually pays for tariffs—and how it could affect your wallet

Whether you’re a business owner, investor, or someone trying to make sense of the headlines, this episode delivers a no-fluff, practical look at what really matters for your financial future.

📩 Got questions? Email the show at info@swpconnect.com

So this week on the capitalist investor we are going to talk about are tariffs inflationary or deflationary. And also we did get a question through our website about Social Security and how the big beautiful bill has changed the landscape. Hey Tony, how are we doing this week. Good man. I'm sorry I'm just tired. I it's like this one stretch of the summer where I'm fortunately playing a lot of golf. Oh, yeah. It's, you know, it happens for about a month where it feels like I'm just playing golf, but that happens one out of 12 months, so, just my body's hurting. How are you hitting them? Terrible. So bad. It's getting a little bit better. I got, you know, I got her lesson, and I'm doing better. It's like one of those things, but I, was playing really, really bad. And I played a match yesterday, and I shot fairly good. I had a I had way more better holes than bad holes. I just put it that way. So how about you? I haven't been playing a tremendous amount. Got out a couple times the last couple of weekends. I did get a mini driver, though. Have you seen those? Yeah, yeah, the color made. Yeah, yeah, yeah. And I'm hitting that really well. Really? Yeah. So what's it supposed to do. It's it's just in between the three wood and a driver okay. It kind of looks like a driver just has a little bit smaller head, shorter sort of shaft. So the idea is so you don't you know you kind of keep it on online more. Okay. Leverage man if you're off on on a on the big stick it goes really far in the wrong direction. So that's how. Got it. Got it. All right. So the inflation you know tariffs you know they reared their ugly head because Trump's deadline popped up on what. July July 99th. Yeah. So and he extended right. But he's like, hey, I'm writing my letters or something. Okay, cool. All right. So are they inflationary or deflationary? And man, it's just a mixed bag. So we're going to try to unpack it a little bit and, and kind of give you our, our views and angles on this. So again, what is a tariff. It's an imposed, tax by one country on goods and services imported from another country. So they basically say, hey, if you are sending $100 worth of product, then I put a 25% tariff on it. People receiving that. So like somebody is buying something from China for 100 bucks. Tariff is imposed tomorrow. It cost $125. Simple way to put it, I believe. So. All right. Well, you know, it's it's. Why did that why does the government use them? It's to protect, protect industries, raise revenues. And that's tax revenues or tariff revenues, political leverage. And rely on I say this it it makes us not rely on everyone else. I mean, let's let's rewind the clock to Covid. How bad was that. Like oh my God. We import everything. Shoot. Like what do we do now. Like and that's why that's where there was mass inflation. And it's sticking now right. It ain't. Nothing's deflationary. Everything just continues to go up. So that's my biggest thing. It's like all right. We might be spending more money on different things and this might be my conclusion. But like we might be spending more more on items. But man, when the world gets flipped upside down like Covid did last time, we're not going to be caught with our pants down, right? It's not going to be hyperinflation like we experienced, during Covid. So yeah, you know, I think, I think it is it is hard to have a debate these days because, you know, especially the, the media kind of always, you know, has a certain slant, on things. But we've talked about in the past, it's very difficult to not produce anything in your country and have a growth economy. Yeah. You know, that that, that's what like Tony said when we found that out the hard way during Covid. And it's not going to be a short process to bring back jobs and manufacturing back into back into this country. You know, even if you wanted to start today. Right? And, you know, it's going to take 5 to 7 years to build the plan, do all the tooling, all that good stuff. So it's a it's a long runway on on the what I kind of believe is the true goal of these tariffs is to bring back American jobs and bring back production to, to the United States. Yeah. It's political leverage. Yup. Right. And that's what it ultimately is. I don't believe that these are meant to be, implemented for a long period of time. Trump is trying to accomplish different goals with different countries based on what they have been tariff of terrifying us in the past. But, you know, you ask, you know, you ask Google, like, hey, do tariffs work? And they're like mixed result. No kidding. Thanks. You know like thanks for that. But so let's unpack it. So first of all what are the cases for inflationary. Yeah, they can be because they're going to create higher costs of importing things. That means that if there's higher cost, there could be less production. And with less production comes less supply. That means higher demand, which means higher prices. I could, you know, and I can just spin that. Right. It's, I'm I'm of I think that the tariffs will make, you know, make the saying made in America means something again. That's how that's how I feel. They can be retaliatory to where it just, you know, the the pissing match that the United States had with to a China like, hey, I'm going to raise year 25. Cool. I got you for 50 now. Hey, I got you for 75. Oh, my God, it's 100% each now. Great thing. So you know and I think that fizzled out. Calmer heads came to, you know, came to the table and released that. But you know, I, I just feel that that this is, that's the inflationary case. It's like, hey, people are just going to stop making less because it costs too much to make. And therefore creating a, you know, supply demand problem. Yep. For sure. You know I think I think we've had a couple months of, of data now. And you know the tariffs are so hard to keep track of honestly. I printed off something, I was like, oh, I've never seen a nice chart like this before. And, it really doesn't say anything at all. Yeah, it's basically to be determined, on every spot. But, you know, the, the inflation, the overall inflation level, there's multiple components to it. Right. And while while tariffs may add costs to things, there are things that we can do to reduce costs, especially transport costs. Right. With fuel that, that that is a big, driver of inflation as well. And, you know, the same people who are, you know, against tariffs where we're cool with your, your gas and oil prices going through the roof. So yeah. Don't quite understand that one. But. Well, yeah. Tariffs have made $100 million year to date. Yeah. And they've only been imposed for what, three three months, two months, something like that. Billion, 100 billion, 300 billion. And, you know, Scott Besson is predicting a 300 billion by the end of the year of revenue now. And to put that in context, in 24, we've only got 77,000,000,000 in 23, 80 billion. So, I mean, this is, you know, a 3 to 4 year. Yep. Right. But but all right man. So this is where I struggle. I can't even fathom $1 billion. Like what do you, but but quote unquote billions of dollars are thrown around every where, like, oh, my God, that thing cost, you know, the the Iron Dome that they want to build. It's what they're protecting, like $50 billion for that. It's probably going to go over budget, but, it's it's 50 like that doesn't seem bad when we printed $4 trillion like billions and trillions. Like, if you ever see those, like, visual things where they stack up like, here's what ten grand looks like. Here's what you know, here's what $100 billion looks like. You know, like these these numbers are like, oh, this is a lot of money. I'm like, dude, you guys spend that in like in in just whipping of a pen. So I, it's hard for me to understand and to really understand. What are they going to do with the money then, like, you. Know, because. There's all this quote unquote waste and stuff, like, where does it go? What, what what is the purpose? What are they going to do with it? I think what, like what a Trump said he was going to do. What the, what the tariff stuff. Wasn't he going. To he was going to give money back to people. Right. Is that what you're talking about? I doubt it's going to pay off the, the, the I think that 30, $36 trillion in debt, I think. That is that is the I think that's his long term goal is to, you know, reduce the deficit, with, you know, the, the revenue that comes in from, from tariffs. Yeah. Again, when you, when you, when you ask Google. All right. What are some of the, you know, deflationary items. They come back and say oh it reduces demand and increases supply. Well then that leads me to believe that there's going to be slow economic growth which get, you know, can, you know, can hurt business investment, consumer confidence, creates layoffs, are hiring freezes, creates a strong dollar. So on the deflationary side of things, I feel that we if these tariffs are so high and there's not free trade, if the tariffs are so high I feel like we're going to then we can make it here domestically create more jobs. And yeah things might cost more. But people are going to have jobs. People are going to make more money. Right. Like it's there's a different angle to this because just importing stuff, because it's done with cheap labor does not mean that's good for us. I mean, yeah, it keeps more money in our pockets, but it could be not creating jobs on the other side of the fence. Yep. For sure. And that, you know, especially with, China, this is a problem that's been going on for, for decades now, you know, and, I mean, I don't remember it in detail, but I remember it's, you know, being a kid and hearing about, you know, manufacturing, moving over. Yeah, overseas, moving to jobs and made in the USA. That was real big, you know, when we were kids. And, you know, it's the benefit they were supposed to get from shipping all that stuff, offshore, just really hasn't happened. And at the end of the day, I think this is a step to to correct that. Yep. So who actually pays this stuff? You know, who pays the tariffs? Well, to clarify, the tariffs are paid by the importer. So for example, I remember when the tariffs started and President Trump started calling out Walmart right. He goes I want you to eat these tariffs. Right. And you know Walmart's like well dude we have like shareholders and people that actually care about our profit margins. And we can't necessarily eat it. Dude. And so that, that, that that's where it comes, you know, it's the people that are actually bringing the, you know, buying the stuff overseas. Again, if you're going to pay, does it now make sense to buy domestically? We're not we're probably not set up infrastructure wise or facility wise or whatever to just start creating new products. That's years in the making. And I think everything is on a standstill right. Until we get, clear, you know, clarity, I mean, because, again, President Trump, you know, extended everything for basically a month, right? While he gets more clarity on who's going to be paying tariffs and who won't. Right. Or what what the tariff deals look like. Nobody's going to say, you know what? I'm going to start, I'm going to build a manufacturing plant. I mean, that's a three year endeavor, right? They're not good. They're going to wait another month to figure out where things stand. Right. And then three months later, it could change again. So who's actually paying them? It's the companies that are buying stuff and bringing them over. And again, I, I will still stand on this, this mountain and say this is that is the opportunity to create more jobs here domestically and also just create self-reliance on basic materials, basic items that we use on a day to day basis. Yeah, for sure. You know, it's the, it's the home builders, right? Where, you know, we're building houses like crazy, especially in Northeast Ohio. It seems like we've had, a boom like we've never seen before. There's houses been going up for for five years, and it hasn't stopped. You know, that it's like the raw material import costs that that really can, you know, get pushed down downstream. So, you know, if you're, if you're out there questioning kind of what, you know, stocks would be affected by, you know, these tariffs, you know, there's anything with those high, import costs for, for the raw materials. So home builders, car manufacturers, you know, those are likely to be the ones most affected. But, you know, there's nothing that says that just because there's a tariff that the the company has to automatically pass that through to the consumer. Yeah. The, you know, the winners of, you know, the sectors affected the most, you know, or people affected the most is obviously domestic manufacturing in the short term. Again, making made in America means something again. But a but also, you know, these companies can't just spend money assuming that the tariffs are going to be in place for a long period of time. Right. Because things move extremely fast with President Trump. Which is fine. But it's very hard for people to predict long term growth, right, for their company or, you know, their capital expenditures. The losers global brands because they got, you know, we are going to maybe start importing less because things just cost more money. Yeah. Tech retail, ag agriculture. And, you know, we're going to be spending more money on food. And I think they said, like, I don't know, 30 or 40% of our tomatoes are made in or not made, but, produced in, in Mexico. Yep. Oh, there you go. Like it was eggs. Now it's tomatoes that are going to be the inflation is now tomato inflation. So any take on on anything else that you would add to the most affected sectors there. I think I think we're good on that one. All right. Historic lessons. You know the Trump did this back in 2018 and 19. But he basically he didn't attack the world. He attacked China. Right. The and he went after solar panels, steel and aluminum. And did inflation really spike? No, because it was a couple things. Obviously steel is very important for construction. Same thing with aluminum. Solar panels were popular back then, because of, you know, the subsidies people would get for installing you know, solar panels on their houses, things like that. So the market just responded earlier this year on a short term vitality or volatility. I mean, we recaptured everything within 6 to 8 weeks. It was crazy. So is inflation spiking or leveling off? You know, that data is telling us that it's calm. It's not it's not spiking. There is there's not much going on. But I guess we'll see in the next GDP just because inflation is not spiking, that could be creating GDP. You know, gross domestic product. And you know, that could lead to recessions. Things like that. And that's that's what we really have to watch because yeah, inflation might not be spiking but productivity is falling backwards. But I again I will say that it's because everyone is on pause. Everyone is waiting to see how this shakes out so they know how to spend their money, intelligently. And when I say people like businesses and corporations to figure out where they're where they need to start positioning their, their money, their manufacturing, so that they can keep costs as low as possible for themselves and the consumers. Well said. Yeah. Thanks. Excellent. And so investors take away you know, be be cautious of the headlines. Again. The the tariff board when it came out really caused a big it was more hawkish than anyone thought was going to happen. And we saw another 8 to 10% downturn in the market when he flashed that tariff board. But again people digested it within a few days, understood what he was doing. And that was, hey, I'm just trying to structure some deals, but I have to I have to threaten them somehow. And he did. He said, hey, for you 30% you over there, 50% you ten I like you maybe. Maybe you better call me first and it'll go up to 25 weird deals. Right. So investors take away just keep an eye out the tariffs are still, a big part of what is going on. But the market is telling us that this is this is a nothing burger. It is this is not what we should be concerned about. Yeah. This is not the this is going to be short lived or it's not going to be detrimental to every, you know, the S&P 500, all 500 stocks. Yep. It would be nice to see a nice clean deal with the EU. I think that would that would alleviate a lot of fears. It doesn't seem like anyone's getting below 10%. That's just kind of my feel on things. Okay. I think I think the UK is really the only one that's like signed, sealed and delivered and that's that's a 10% tariff. I think everything up. There was zero before, right? It was up. Yeah. It was it's definitely zero. Yeah. Yeah. I mean there's it's different. You know, there's different sectors that hit, but it was basically zero. Yeah. Yeah. So yeah, you know, it's I guess Trump's thesis I agree with, it's basically, you know, if you want to send your products to the United States, you know, like the number one market in the world, you're going to have to pay a little bit of tax on that. And then, on the back end, hopefully that reduces the overall income tax, or at least, pays for the cuts that, that were just pushed through. So, we shall see, how it goes. But after some honestly, after the bumpy start and the, the tariff board, you know, the the market's barely reacting to these things now, you know, relatively speaking, you know, I think yesterday was a down day, but, you know, not yeah. But that's the last 15 have been on. Exactly. And so, you know, it's crazy when people start taking a look like, oh my God, we had a down day. I'm like, yeah. Did you watch the last three weeks? Yeah. Have been. In weeks. Yeah. That's crazy. So, to address, one of the questions I got the other day, from, you know, a listener kind of email coming in. And if you want to, if you have any questions for us. What is it, Derek? Info at info@connect.com. Yep. One of my clients is, you know, like they, or one of the listeners kind of came out and just said, hey, big beautiful bill passed, Social Security, there's tax cuts. Am am I is this help me. And, you know, within five seconds, the answer was no. Right. Because there's a couple things. The biggest the biggest hurdle is age. It's, this affects people that are 65 and older. He was. He's 63. So it will not help him for at least two more years. And the other thing is, is that if you're a single filer, you can't make more than basically 75 grand if you're married filing jointly, you can't make more than 150 grand. So if there's like, big pensions, you're, you know, high RMD, distributions or inherited RMDs, things like that, that create income in, in retirement. There are income limitations on that too. So we'd love to talk about the big beautiful Bill, but holy cow, man. Like if you it is very hard to like really understand if if it's good or bad. Right. Because they're, they're, it's just shifting and it's just molding different tax ideas. Salt was increased. You know state and local tax extension of the 2017 tax cuts or like oh my god this is going to cost us$10 trillion over the next decade. And you know, they said that last time. Yeah, we talked about this before the show started. They talked about it being a cost where it actually increased tax revenues because it it created growth. You know, people spent more money and paid taxes on the stuff they bought. Therefore they created more money. You know, they create more tax revenue. That's the bottom line. You know, if you're, you know, in the middle, middle politically and they're wondering which way to lean you know, the we're not taxing and spending our way out of this mess that that we're in that that is certainly not in the realm of possibilities. And we're not increasing our spending and increasing our taxes and getting our way out of this mess either. The only way is through increased revenue and increased domestic production, that that's what we have to do, to to get out of the the extreme, budget deficit that, that, that we're in. Yeah. So but the, the quick and the quick and dirty on the Social Security, you have to be over 65 and make under a certain amount. Yeah. So and you know that that's always that was all. There was always going to be restrictions on it. Right. You can't be pulling in you know half a million. And you know investment income in your retirement and then, you know, get freeze. And Social Security is meant for the people who don't have much, in addition to Social Security. So, yeah, I think that's a good thing. I think no tax on tips, especially, especially in that bracket because no tax on tips is probably like for younger people. You know, so that, that is that's, that's a really good thing. I remember when I was like in college. Right. And I was serving, I was bus and table serving and things like that. Like I had no other income except that. Right. You know. And I got excited when I, you know, got paid in cash because any quote unquote don't report it or report as much or whatever it may be. Not that I did that report it every dollar, but I know other people that did it. Right. But but you know what? The sources can. I know a. Guy, I know a guy. I woke up our engineer. Yeah. And and so what it does is it's a it's a tax deduction up to six grand for seniors age 65 and older. Yeah. So that's what it is. All right, take us home day. All right. Well, good stuff this week. If you guys have any questions, comments or concerns hit us up at info@connect.com. And we'll talk to you next week. The opinions expressed in the podcast. Are for general informational purposes only, and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.