As President Trump threatens to slap an increasing menu of tough tariffs on many of our trading partners, and boasts that his tariffs on imports from Canada, Mexico, Europe and China, will be a benefit to America’s farmers and manufacturers, troubling economic signs are starting to appear.
Many economists, and outside business experts, strongly disagree—many say cautiously, afraid of incurring Trump’s violent rants, that these tariffs will increase inflation, slow economic growth, hurt U.S. workers and result in American consumers footing the bill for his tariffs.
The combination of a trade war, combined with the ruthless cutting of government works across the board of agencies, could be a toxic mixture that turns a normal slowdown in the economy into a hard landing and a prolong recession.
Although many of Trump’s Executive Orders are being challenged in various Courts of Law, they may be too little, and too late, to prevent the sharp decrease in consumer spending that is starting to show up in reports.
As the Government Bond Markets are starting to factor in the huge amount of new U.S. Debt that must be serviced and rolled over in 2025, even some of Trump’s most ardent supporters such as Fox News, are starting to worry.
Although after a 10% decline from the highs a month ago, the markets are trying to rally, one has to worry about the potential of another war breaking out in the Middle East, and its ability to disrupt the price of oil.
It reminds me of the Mad Comics cover image of Alfred E Neuman’s famous quote: “What me Worry?”
Of course, this is not investment advice. But one has to wonder why Warren Buffett of Berkshire Hathaway maintains a way above average cash balance which he keeps in short term Treasury Bills, rather than in Equities, which is his normal preference.
Stay tuned.