Transcription
The Supreme Court just canceled the Trump tariffs, and President Trump responded by saying, "If we are forced to repay this tariff revenue, we're going to see a 1929-style Great Depression here in America." So, in this video, I want to break down what's going on with tariffs. What is this going to mean for the economy, the stock market, and your money?
So, let's break this all down because in 2025, President Trump passed sweeping tariffs on many countries around the world based off of something called the EA, the International Emergency Economic Powers Act, which gives the United States president special powers when there is a national emergency. And in this case, President Trump said that the national emergency was fentanyl coming into the United States, this trade deficit. And in response to these problems, the president should be able to pass tariffs on these countries.
Well, this is where the Supreme Court said no. The president does not get the power to pass these tariffs. That is Congress's job. Congress has to actually pass the tariffs and approve the tariffs because it's a tax.
Now, this has a big question because over the last year or so, the United States has collected somewhere between $150 billion and $200 billion in tariff revenue. And the question is, what is going to happen with this money? Is the government going to have to pay this money back to the businesses that paid these tariffs? Is the government going to have to pay this money back to the American citizens who paid higher prices because of the tariffs? Or does the government get to keep that money? And the answer is, we don't know. That question of what's going to happen to this tariff revenue is going to go back to court. President Trump says it's going to take years before we see an answer. I don't know how long it's going to take, but it will take time. So, the question on what's going to happen with the tariff money is unclear.
But the next question is, well, are we still going to have tariffs on countries? And what are the new tariffs going to look like? Well, the answer is yes. We're still going to have tariffs. Certain tariffs did not go away. For example, the tariffs on steel, aluminum, and heavy trucks and cars, and then the tariffs on China, those are still in place. The reason why is those were not tariffs that were imposed under the EA. Those were tariffs under different sections.
But that's not all. President Trump, as soon as this ruling came out, imposed a brand new 10% global tariff. How could he do that? Well, he did not do it under the EA. He did it under something called Section 122. Section 122 because that gives broader power to the United States government, and he believes that this has stronger footing for him to put on this global tariff on just every country. And then 24 hours after putting out this 10% global tariff, President Trump responded by saying, "No, we're not going to do a 10% global tariff. It is going to be a 15% global tariff effective February 24th, 2026."
So the tariffs have not gone away. We don't know what the future of these tariffs are going to look like because now this is something that's going to have to be figured out as well, if President Trump can pass these tariffs under Section 122. But the idea is now the legal fight for tariffs is going to continue. We have this $150 to $200 billion in tariff revenue that if the United States government has to pay it back, there's going to be a cost, a pain to the United States government that has to be made up somewhere. Whether it's through higher taxes, whether it's through more money printing, in any case, there's going to be a cost if the government has to pay it back. And we don't know who it's going to go back to.
Now, let's flip gears and think about the stock market. When the news came out that the Supreme Court canceled the Trump tariffs, we saw the stock market go up. Why? Because the stock market and investors in the stock market said, "Oh, now these businesses no longer have to pay these additional fees and fines because, or taxes, I should say, because these higher tariffs were already baked into the prices of these stocks. This higher cost was baked in. If they don't have to pay that anymore, well, now these businesses should be able to make more money, or potentially sell more stuff if they don't have to raise their prices as much. Or maybe these businesses are going to get a rebate from the United States government, which is going to be good for their bottom line because that means they just got some money back. Or maybe Americans are going to get a check, and that's going to mean more spending for them, which means more boost for the stock market." Again, we don't know what's going to happen to the tariff revenue, but that's the idea, which is why the stock market got very excited.
Now, the new part that happened over the weekend is the new tariffs that the Trump administration has now imposed, the 15% global tariff. And we're going to have to wait and see to really what that's going to mean. But what does this mean for investments and your money? Because remember, tariffs are a tax. It is a tax paid by the person that is importing a product. So, if you are importing products from China and you bring it into the United States, you have to pay a fine, a tax, a fee, call it whatever you want, I don't care, but it's a tax that you have to pay as the business that is importing this product into the United States. So, if you're buying something for $100 and you sell it for $200, well, now that cost goes up from $100 to say $115 because now you have to pay this additional tax. And the question then is, are you going to continue selling the product for $200 and have a smaller profit? Are you going to sell it now for $215 to pass the cost down, or are you going to sell it for $230 that way you can maintain your margin?
And we saw a whole suite of answers. Certain businesses said, "We're just going to eat up the profits for as long as possible, and hopefully we won't have to raise prices for too long." Other businesses said, "We're just going to pass the cost down because we have no other choice because our margins are already so thin." And other businesses raised their prices because they needed to maintain their profit margins.
Well, now that we're in a situation where the previous tariffs have gone away, we're seeing new tariffs come in. There's again uncertainty, and the stock market does not like uncertainty because uncertainty causes volatility. Because if an investor cannot predict how much money a business is going to make, if they cannot predict what's going to happen in the economy tomorrow, they feel less confident about where they should park their money. And that's why we're going to see more volatility because you bet that this is going to be a hot topic for well, the rest of 2026 because it's not just what's happening in the White House, it's what's happening in our broad economic system.
Because on top of the tariffs, what else is happening? We're going to see a big change at the Federal Reserve Bank because right now the chairman, meaning the head of the Federal Reserve Bank, is a guy by the name of Jerome Powell, and Jerome Powell has not been doing what the president wants. The president wants significantly lower interest rates. Jerome Powell has essentially said, "No, I don't want to do that." Now, you might say, well, if the Federal Reserve Bank is not doing what the federal government wants, why doesn't the president just fire the head? And it's because although it's called the Federal Reserve Bank, they're actually not a bank because you and I can't go there to deposit money. It's not a reserve because they're not sitting on any cash reserves, and it's not federal. They're not a part of the Federal Government. So the president technically can't fire the chairman of the Federal Reserve Bank.
But the chairman's term is expiring this May, just a few months from now. And President Trump has appointed the new chairman, or who he wants to be the new chairman at the Fed come May. It's a guy by the name of Kevin Walsh. Why does that matter? Because that's going to be a new head of the Federal Reserve Bank. And the Federal Reserve Bank is the head of our monetary policy, which is the head of the reserve currency of the world because the dollar is the world's reserve currency, and the entire global economy revolves around the United States dollar and what's happening in the United States economy. So, this is going to have a big shakeup come May on top of the tariffs.
But one of the things I also want to talk about because I was recently in California doing a number of podcasts. A topic that came up was, well, what do tariffs actually mean? Are we seeing these tariffs as a way to generate revenue? And yes, that's one reason to generate tax revenue, to bring businesses back to the United States. But there's one more big reason why these tariffs are so important to President Trump. And the reason why it has to do with China.
Now, why does China really matter here so much? The reason why China matters so much is because right now the largest economy in the world is the United States. But China is catching up. China's economy is growing faster than the United States. And if you just do some math, you'll see that in the near future, in the coming years, if the Chinese economy continues to grow at the rate that it is, and the United States economy continues to grow at the rate that it is, the Chinese economy will then be bigger than the United States economy.
Why does that matter? Because if you start to see what China is doing, which is acquiring as much physical gold as possible, they're trying to strengthen their currency. They're trying to be the strongest economy in the world. Why? Because they want to displace the United States as the world's economic superpower and as the world's reserve currency. Why does that matter? Because when you have the world's reserve currency, you have the ability to spend more money as the government. You have the ability to print more money. That's why we can keep printing so much money and spending money we don't have here in the United States because we are the world's reserve currency, and countries around the world believe in the value of the United States dollar.
Now, you can start to see the problem here that if the Chinese economy continues to grow faster than the United States economy and the United States is no longer the largest economy, that could mean problems. And this is one of the reasons why the Trump administration has been so aggressive with tariffs, especially on China with all these additional tariffs. The reason is, if we have these aggressive tariffs on China, businesses will feel more motivated to move operations out of China. Why does that matter? Because that can then hurt the Chinese economy. This is a big reason also why the United States went into Venezuela and captured the president of Venezuela because China was the biggest buyer of Venezuelan oil. So there are multiple ways now that the United States is now trying to fight China without just tanks and guns. It's an economic fight to strengthen the United States economy, to bring manufacturing back hopefully, but also hurt the Chinese economy. That's a big reason why these tariffs are so important to the Trump administration.
Now again, a lot of uncertainty as to what's going to happen. But when it comes to the dollar, remember the value of the dollar ultimately depends on people's faith in the dollar. And when there are concerns about inflation, when there's concerns about the economy, concerns about the dollar go up. And these concerns about the dollar go hand in hand with money printing and inflation, but the prices of things can also go up if the cost of producing those items go up. In other words, tariffs. When you have tariffs, companies have a higher cost of producing products. Either they have to pay a higher price because they make it in the United States, or they have to pay a higher price because there's an additional tax that they have to pay. Well, if that tax goes down from, let's just say 25% to 15%, well, that cost of producing a product goes down, and companies then have more ability to lower their prices.
And this is where again, this is not a good answer, but there's a lot of uncertainty because we don't know what's going to happen with tariffs. I mean, if you stick with me for the next week or two, we'll have a lot better understanding of what's going to happen with tariffs. But the idea is, if tariffs are there, companies have to pay a higher price. If they have to pay a higher price, that means you consumers have to pay a higher price as well. That's the part that you want to pay attention to.
Now again, the uncertainties are: What is the government going to do with this tariff revenue? We're probably not going to know for a long time if the government has to pay back this tariff revenue. That means businesses and people may have more money in their pocket, which can stimulate spending, but it's going to hurt the government. And that hurting of the government is going to have to be made up somewhere because the government is not sitting on cash reserves. That's why we have a $38-some trillion national debt. We don't have enough money to pay our bills as it is. And so if we have an additional, oh my god, $150,000 or $200 billion fee that we have to pay, this, this payback of tariffs, that money has to come from somewhere. Either it's going to come from higher taxes that you ultimately will have to pay back, or it will come from money printing, which then the average person will pay for in the form of inflation. That's the first uncertainty.
Second uncertainty is, what are we going to see with these new tariffs? President Trump has now passed a new round of tariffs. Let's see what happens to these. Will these stick? Will they go up? Will they go down? Will they be changed? We just started to see these new tariffs. And if you remember what happened in 2025, it was many months of tariff negotiating before we had any real clarity as to what tariffs are going to be. So now that we have a brand new section, you bet that there's going to be a lot of litigation as to can the president actually pass these new tariffs? Can he pass them to this extent? Can he do more? That's the uncertainty that we're going to see in the coming weeks.
And then the question is, what is that going to mean for the stock market? Because ultimately, the stock market values a business based off of how much income potential it has in the future. If businesses have higher costs, it hurts their ability to make more money. If they have lower costs and they can sell more stuff, well, then they can make more money. That's what the stock market is thinking. And that's why again, it is so important for you to be an investor. That way, no matter what's happened, you can be on the winning side of the equation.
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