What is an investor supposed to make of all the tariff nonsense?

Consider the two following stories. First, from the Times:

Business confidence rose to its highest level since before the October budget, boosted by President Trump delaying his reciprocal tariffs, according to a new survey.

The latest economic confidence index from the Institute of Directors increased to -51 in April from -58 in the previous month, the highest reading since September. The data is based on a survey of 648 business leaders carried out between April 11 and April 29.

British business confidence is at its highest in more than six months.

Next, this from Yahoo! Finance:

US manufacturing activity slid to a five-month low in April as President Trump’s tariffs continued to create uncertainty for businesses.

The Institute for Supply Management’s manufacturing PMI fell to 48.7 in April, below the 49 seen the month prior. Readings below 50 indicate contraction in the sector.

Does this mean that President Trump’s domestic critics are right? That his tariffs are bad for American business. Which means the US tariffs are good for Britain… and everywhere else.

We guess that’s possible. But our view remains the same as it was before both these news items. It’s way too early to tell. Ultimately, we’re not convinced the tariffs will make a difference overall, because there are too many vested interests making money from the ‘old way’ of doing business.

You can see the way Mr Trump has made concessions on the tariffs here and there – even with China. As time goes on, countries and businesses will adjust… new tariff ‘carve-outs’ will emerge… and the ‘before and after picture’ will look mostly the same.

In a way, we’re hope we’re wrong. As mentioned previously, all else being equal, we’re not in favour of tariffs, because we prefer governments didn’t forcibly grab money from the private sector.

But the current distorted system, where governments subsidise favourites and punish others in an opaque way is arguably worse than tariffs, because it survives on secret deals.

A true and open tariffs system would destroy that. It would say that imports from country A are X% and those from country B are Y%. Everyone would know. Maybe it would encourage various countries to not manipulate their domestic economy. Or at least not manipulate it as much.

As it stands, the markets have continued to recover from the lows after the introduction of the tariffs. Let’s see if that continues. Regardless, despite the screeching from the mainstream, they’re still to produce any evidence that we’re about to fall into an almighty economic collapse.

Bottom line: Stay invested… for now.

Links to recent content below.

Hope you’re having a great weekend.

Cheers,

Kris Sayce
Publisher, Southbank Investment Research

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