View In Browser | Free Reports | Premium Services By Charles Sizemore, Chief Investment Strategist, The Freeport Society I’m tired of tariffs. I can’t say I’m tired of paying for them – their effects haven’t yet flowed through the economy. But I’m tired of hearing about them. It’s exhausting. Yet, we just got a new slew of them over the weekend. President Trump announced 30% tariffs on goods from the European Union and Mexico. They’re scheduled to take effect on August 1. This adds to the 50% tariffs on goods from Brazil… 35% on goods from Canada… and probably a few others I’m forgetting about. So, how much of this is real? How much of it is a President Trump negotiating tactic? Most important, what effects will it have on the economy and on our wealth? Reducing Real Wealth Before we get into all of that, let me lay my Freeport Society cards on the table. There are parts of President Trump’s agenda we can get behind. Slashing regulation? Yes, sign me up. Creating the infrastructure to better integrate stablecoins and other cryptocurrencies into the financial system? Hell yes! Scrapping most DEI (diversity, equity, inclusion) initiatives? That couldn’t have possibly come soon enough. But as a freedom loving publication, we can’t get behind tariffs. Our mantra is “Free minds, free speech, and free markets.” Tariffs are the enemy of free markets. As legendary libertarian newsletter man Bill Bonner put it in these pages over the weekend… All economies rely on trade – between people, businesses, cities, and countries. Anything the feds do – including the “tariff tax” – to make trade most costly reduces real wealth. My assumption – and my hope – is that this new round of tariff announcements is mostly another negotiating gambit. The new tariffs on Mexico, Canada, and the EU probably won’t go into effect. Or if they do, it will be for just a few days… so Trump can prove he wasn’t bluffing. Our trading partners will then make some grand “concession” that gives Trump the appearance of a win for the cameras. Tariffs will come down to something a little less disruptive to global trade. And then life goes on. I say “probably” because we don’t really know. Things don’t always go according to script. Investors are still betting that the “TACO” trade is in effect. (That’s Wall Street’s moniker for “Trump Always Chickens Out.”) The problem is that this sends a false signal to Trump. The lack of volatility sends the message that Wall Street is comfortable with high tariffs… or even supportive. This then encourages the president to keep them higher for longer until something finally breaks. The stock market isn’t pricing that in. It’s pricing in a world in which the high tariffs were a bluff, trade carries on more or less as usual, and the Fed rides to the rescue with emergency liquidity if anything goes wrong. That might happen. Or it might not. Recommended Link | | | | Jeff Clark has kept his Crossfire strategy close for years. But he’s no longer working with his Silicon Valley clients… So, he can reveal the whole thing in a new free strategy session. It’s a rare opportunity to learn his three-step process for potentially massive profits. Click here to watch now. |  | |
Pay More or Buy Less We’ll assume that the weekend tariffs are a negotiating tool. Still, tariffs are higher than they were in January. The effective overall tariff rate is 17.6% now, according to Yale University’s Budget Lab. That’s up from about 2.5% last year. By Yale’s estimates, this should bump up inflation by an extra 1.7% – raising the average cost per household by about $2,300. That’s not catastrophic. By itself, it won’t push us into a recession. But it does erase almost all of the benefits of the income tax cuts that Trump just signed into law. Had his One Big Beautiful Bill Act not passed, the pre-2017 tax rates would have gone into effect at the end of this year. It would have raised taxes by about $2,600 for the average household. But here’s where the numbers take a turn for the worse. Americans won’t just be paying more. Faced with higher prices, they’ll also be buying less. Following Yale’s analysis, shoe and clothes prices will jump 37% and 35% higher in the short run… and will stay 18% and 17% higher over the long term. If every pair of shoes costs 18% more, you’ll buy fewer pairs. But let’s consider knockdown effects. Nike cuts costs as best it can. But the company still needs to protect its profit margins. So, it leans on their retail partners such as Dick’s Sporting Goods and Academy to share some of the pain with them. That’s not easy, given that the majority of their inventory is imported. But these retailers do the best they can – cutting costs, reducing store hours, getting by with fewer salesmen and cashiers. But retail service has been dismal since the pandemic… and none of this will help that. A further degradation in service encourages more shoppers to avoid the stores altogether and look for cheaper alternatives online. Suddenly, brick-and-mortar retail – which has been losing ground to Amazon.com for a quarter century now – is facing a downward spiral. Stores close. Landlords are left with space they can’t rent. Mortgages don’t get paid. Banks start to come under pressure. Then we may well have a real recession on our hands. And that’s not the only knock-on effect for the economy. Who Will Man the New Factories? We don’t have an inexhaustible labor supply – especially against the backdrop of mass deportations of immigrants. Bringing back manufacturing jobs will mean pulling labor away from other trades. Labor is pulled out of construction, for instance, and into manufacturing. Now, finding labor for new construction projects is harder… and more expensive. This means fewer houses will get built… and the ones that are built will be more expensive. That means the crisis of unaffordable housing – which has been building for a decade – could be about to explode. On a long enough timeline, fully automated AI-driven factories will bail us out. As I wrote last week, we may all have a staff of Optimus robots at our disposal to command. I may have a crew of them build me a house! But that’s not going to happen next week… or even this decade. Transformations that big take time. In the meantime, higher prices and slower consumer spending will cut into corporate profits. In fact, it already is. Nike’s sales were down 12% last quarter, and its earnings were down 86%. And this is before the effects of the tariffs have been fully realized. So, ask yourself this… Does it make sense that the U.S. stock market is priced at one of its highest valuations in history – at 28 times earnings and 3 times sales – when earnings are set to slow? Not in my book. I’m not telling you the market will crash tomorrow – Mr. Market has a mind of his own. But be smart. Keep a little extra cash on hand. Make sure you hedge with gold. And consider taking a more short-term approach to trading. Freeport Society friend, and trading veteran, Jeff Clark recently told me about the three-step strategy he uses to grab fast, triple-digit wins. He calls it “Crossfire” because it gives you more control over your wealth growing efforts in this Age of Chaos. And he’s been using this strategy to help a small circle of elite clients for years. Now, he’s showing how it works and why it works in this video presentation. Here’s Jeff, No matter how much faith you might have in President Trump or the power of the American economy… It’s hard not to be a little nervous about the future. But remember this… Great investors don’t make their fortune during booms. They make money when things are difficult. Two examples of the power of this strategy are Strategic Education (STRA) and Netflix (NFLX). Earlier this year, STRA dove 19%. No one holding that stock was feeling good about it. But when Jeff “Crossfired” it, he was able to bank 1,285% in two days? Using this same strategy, he banked profits of 1,007% on NFLX in just 15 days. How does it work? Jeff explains it much better than me in this video, but basically, the “Crossfire” indicator looks for when a stock’s momentum flips. This chart illustrates this well… 
The green line measures how fast the price is moving. The blue line is an average of how much the price has been moving up and down recently. When those lines cross, it shows a change in momentum. And more often than not, when that crossover happens after a big drop, the bounce is already underway. Jeff has mastered the strategy that finds these crossfire moments, so watch his video to learn how you can do it too. Remember, being a smart investor isn’t a static state. It requires flexibility and the willingness to adjust to the environment. During this Age of Chaos… in these times of high volatility and uncertainty… the best thing you can do is stay agile. To life, liberty, and the pursuit of wealth, | 
