Welcome back to the Net Worth Podcast.
Speaker 1: This week we are diving into how tariffs affect your personal wealth.
Speaker 2: Now this might sound, you know, a bit technical, like something for economists.
Speaker 1: Stuff you hear about in the news but maybe feels distant.
Speaker 2: Exactly.
Speaker 1: But today we’re going to unpack the key takeaways from this edition.
Speaker 2: Tariffs.
Speaker 1: Eroding your net worth.
Speaker 2: And what are tariffs and why you need to care.
Speaker 1: These really break down how these policies actually hit your bottom line.
Speaker 2: your net worth.
Speaker 1: Check out the full edition on our website wearenoyack.com.
Speaker 2: That’s wearenoyack.com.
Speaker 1: OK, so let’s peel back the layers on this.
Speaker 2: Tariffs.
Speaker 1: The word itself, it can feel a bit intimidating.
Speaker 2: Yeah, like heavy economic jargon.
Speaker 1: Right.
Speaker 2: But this edition makes it super clear.
Speaker 1: At its heart, a tariff is just a tax.
Speaker 2: It’s simply a tax on imported goods, goods coming into the country.
Speaker 1: And that simple fact means they hit your wallet directly, whether you realize it or not.
Speaker 2: What’s fascinating though is how that simple tax ripples out.
Speaker 1: The implications are, well, they’re huge, especially for your net worth.
Speaker 2: It’s not just government policy over there.
Speaker 1: No, it’s about your everyday costs, your investments, everything.
Speaker 2: And this edition points out this 20-25 twist to these reciprocal tariffs.
Speaker 1: This sounds pretty aggressive.
Speaker 2: It is.
Speaker 1: It’s not just theory anymore.
Speaker 2: It’s real world policy.
Speaker 1: Countries like the US basically saying, you tax our goods, we’ll match it or even exceed it.
Speaker 2: That’s exactly it.
Speaker 1: And the numbers in this edition are frankly eye popping.
Speaker 2: We’re talking effective duties up to 104 percent on good from China.
Speaker 1: Wow.
Speaker 2: 104 percent.
Speaker 1: And 46 percent from Vietnam.
Speaker 2: Even 20 24 percent from places like Japan and the EU traditional allies.
Speaker 1: These aren’t small changes.
Speaker 2: Not at all.
Speaker 1: These are major hikes.
Speaker 2: And while the goal might be, say, protecting domestic jobs or balancing trade.
Speaker 1: The immediate effect?
Speaker 2: The immediate effect is this addition clearly lays out is that these costs mostly get passed on.
Speaker 1: To us, the consumers.
Speaker 2: Exactly.
Speaker 1: So that new phone, those clothes, maybe even some of your groceries, a price tag reflects these duties.
Speaker 2: It’s not abstract.
Speaker 1: It means higher prices for you.
Speaker 2: OK.
Speaker 1: That really brings it home.
Speaker 2: So that laptop I’ve been eyeing could actually jump in price because of this.
Speaker 1: It very well could.
Speaker 2: It hits your purchasing power directly.
Speaker 1: Right.
Speaker 2: So here’s where it gets, well, a bit concerning for people trying to build wealth.
Speaker 1: How does this erosion actually happen?
Speaker 2: The first way seems pretty straightforward.
Speaker 1: Increased living costs.
Speaker 2: Exactly.
Speaker 1: Think of it like a constant low-level drain on your finances.
Speaker 2: OK.
Speaker 1: When tariffs push up the prices of everyday things, electronics, clothes, food items, your money just doesn’t stretch as far.
Speaker 2: So your paycheck buys less.
Speaker 1: Precisely.
Speaker 2: Yeah.
Speaker 1: And that directly impacts your net worth because it slows down how fast you can save or it just reduces your overall spending power.
Speaker 2: You have less disposable wealth because essentials cost more.
Speaker 1: Right.
Speaker 2: And that makes it harder to hit savings goals or invest for the future.
Speaker 1: And it’s not just the price tag on the item itself is it.
Speaker 2: This edition talks about inflation and interest rates getting hit too like a double whammy.
Speaker 1: Yeah that’s a really important connection when tariffs push up costs for businesses for imported materials maybe exactly or finished goods.
Speaker 2: They often pass those higher costs along the chain.
Speaker 1: Right down to the consumer.
Speaker 2: Which fuels broader inflation, not just on imported goods, but potentially across the board.
Speaker 1: And when inflation stays high.
Speaker 2: Well, that makes central banks nervous.
Speaker 1: They might hold off on cutting interest rates.
Speaker 2: Or even raise them.
Speaker 1: Or even raise them, yeah.
Speaker 2: Yeah.
Speaker 1: To try and cool things down.
Speaker 2: And that has direct negative effects on your net worth.
Speaker 1: How so?
Speaker 2: Two main ways.
Speaker 1: First, higher rates generally mean lower market values for bonds you might own.
Speaker 2: bond prices move inversely to rates.
Speaker 1: so your bond investments lose value.
Speaker 2: Potentially, yes.
Speaker 1: And second, higher rates mean higher interest costs on any debt you have.
Speaker 2: Variable mortgages, credit cards, loans.
Speaker 1: Ouch.
Speaker 2: So it costs more to borrow and your existing investments might be worth less.
Speaker 1: Exactly.
Speaker 2: Both chip away at your net worth.
Speaker 1: So it’s this ripple effect.
Speaker 2: A tax on imports, higher prices, potentially higher interest rates hits your bonds and your debts.
Speaker 1: Wow.
Speaker 2: And it doesn’t stop there.
Speaker 1: It extends to our investments more broadly too.
Speaker 2: Think slower economic growth.
Speaker 1: does that connection work?
Speaker 2: Well, tariffs can create friction in global trade.
Speaker 1: Uncertainty.
Speaker 2: That can slow down the whole economy.
Speaker 1: OK.
Speaker 2: And when the economy slows, companies often report lower revenues, lower profits.
Speaker 1: This edition mentioned deer and caterpillar.
Speaker 2: Yeah, big industrial companies very exposed to global trade.
Speaker 1: They felt it.
Speaker 2: And lower profits mean?
Speaker 1: Lower stock prices.
Speaker 2: generally.
Speaker 1: So the value of your stock portfolio, your retirement accounts, anything tied to corporate performance can decline.
Speaker 2: it really filters down from global policy right to your personal balance sheet.
Speaker 1: Absolutely.
Speaker 2: It’s all connected.
Speaker 1: Now something else that really stood out in this edition was the point about wealth inequality.
Speaker 2: It doesn’t hate everyone the same way.
Speaker 1: No, definitely not.
Speaker 2: That’s a crucial point.
Speaker 1: Lower income households tend to get hit much harder.
Speaker 2: Why is that?
Speaker 1: They spend a much larger chunk of their income on basic goods, food, clothing, essentials, many of which might be imported or affected by import costs.
Speaker 2: the price hikes take a bigger bite out of their budget.
Speaker 1: Exactly.
Speaker 2: And they usually have less of a financial cushion, fewer savings, maybe less access to investments that could offset the losses.
Speaker 1: So their net worth can erode faster.
Speaker 2: Much faster, yeah.
Speaker 1: Compared to higher income folks who might absorb inflation more easily or have advisors helping them adjust their portfolios.
Speaker 2: edition mentions Millennials and Gen Z potentially being hit harder.
Speaker 1: Yes, because many are in earlier stages of wealth building.
Speaker 2: They have fewer resources, maybe more debt already, and are just more sensitive to rising costs.
Speaker 1: It makes climbing that financial ladder even tougher.
Speaker 2: It really sounds like that classic short-term game for some long-term pain-for-many situation.
Speaker 1: That’s a very good way to put it.
Speaker 2: You might see a temporary boost for a very specific domestic industry that gets tariff protection.
Speaker 1: Like a shield for them.
Speaker 2: Right.
Speaker 1: But the broader consensus among economists and what this edition reflects is that over time tariffs tend to hurt overall productivity.
Speaker 2: They limit competition, raise costs.
Speaker 1: Like the whole economy less efficient.
Speaker 2: Generally, yes.
Speaker 1: Which ultimately means lower overall economic well-being and slower growth in net worth for almost everyone in the long run.
Speaker 2: It’s like dragging an anchor behind your financial progress.
Speaker 1: A tax on the future, almost.
Speaker 2: And that’s one way to think about it, yeah.
Speaker 1: OK, so this paints a pretty complex and frankly slightly worrying picture.
Speaker 2: But this edition of Noyack Wealth Weekly isn’t just about the problem, right?
Speaker 1: It offers some actionable insights for listeners.
Speaker 2: What can people do?
Speaker 1: Absolutely.
Speaker 2: Knowledge is power, but applied knowledge is better.
Speaker 1: Given all this uncertainty, tariffs, rates, politics, It feels harder to plan long term.
Speaker 2: For sure.
Speaker 1: But this edition offers some really practical strategies, ways you can try to navigate this.
Speaker 2: One that jumped out at me was diversifying globally.
Speaker 1: Seems fundamental.
Speaker 2: It really is.
Speaker 1: The logic is simple.
Speaker 2: If one country’s economy is hit hard by tariffs, another might not be or might even benefit somehow.
Speaker 1: So spread your risk.
Speaker 2: Exactly.
Speaker 1: Don’t put all your investment eggs in one country’s basket.
Speaker 2: Look at international funds, ETFs, maybe companies with global operations.
Speaker 1: And this edition also mentioned real estate specifically.
Speaker 2: Yeah.
Speaker 1: As part of that diversification.
Speaker 2: Real estate can sometimes act as a hedge against things like inflation or currency swings, which tariffs can worsen.
Speaker 1: So it’s about looking at your whole asset mix, stocks, bonds, real estate across different geographies.
Speaker 2: What about specific stock sectors?
Speaker 1: The edition mentioned retail and manufacturing get hit hard.
Speaker 2: Right.
Speaker 1: They’re often on the front lines, dealing with import costs, supply chains being disrupted.
Speaker 2: So what should you watch for?
Speaker 1: Maybe look at company reports.
Speaker 2: Do they mention tariffs?
Speaker 1: Are they shifting supply chains?
Speaker 2: How are their profit margins holding up?
Speaker 1: It gives you clues.
Speaker 2: And beyond stocks.
Speaker 1: Follow the actual policy, not just the news headlines.
Speaker 2: Tariff rules can change fast.
Speaker 1: Yeah, you blink and something’s different.
Speaker 2: So staying informed from reliable sources is key for making timely decisions.
Speaker 1: OK, and on a more day-to-day level, the addition mentions budgeting for higher prices.
Speaker 2: Yeah, that’s the practical reality.
Speaker 1: If you love certain imported things, gadgets, clothes, specific foods, you might just need to factor in higher costs.
Speaker 2: Or look for alternatives.
Speaker 1: Or look for domestic alternatives, yeah.
Speaker 2: Be more conscious of where things come from.
Speaker 1: It also mentioned voting with your dollars.
Speaker 2: Supporting brands that are transparent about their supply chains, maybe focus on local sourcing, so being proactive, making conscious choices.
Speaker 1: It’s really clear then.
Speaker 2: Tariffs aren’t just these abstract economic tools.
Speaker 1: They’re actively shaping your personal financial world?
Speaker 2: Directly.
Speaker 1: From the cost of coffee to your retirement savings, your ability to build wealth, to see it grow, to plan.
Speaker 2: It’s all tied into understanding these global trade dynamics.
Speaker 1: It’s not just about earning money.
Speaker 2: No.
Speaker 1: It’s about how much that money can actually buy and where your assets can realistically grow in this tariff-influenced world.
Speaker 2: So the big question for you, the listener, is how will you adapt your strategy?
Speaker 1: How will you make sure these global forces don’t quietly undermine the wealth you’re working so hard to build?
Speaker 2: Remember to subscribe to Noyack Wealth Weekly on our website, wearenoyack.com, to read the article behind today’s conversation and to get our weekly newsletters straight in your inbox.
