Trump Tariff - Liberation Day Update

Today the reciprocal tariff was declared by president Trump - so called “Liberation Day!”. But if you see the table below, it does not look illogical as U.S would be charging 50% of what other countries are charging! It does not seem illogical from business perspective. We may argue on this but please see the table below.


So, the cost would go up proportionately for all goods and commodities exported to U.S.A. Some of the cost would be absorbed by the companies and some of them would be passed on to the consumer. This may further aggravate the inflationary situation in short term. But the next few weeks will be immensely important as many countries should be coming to the negotiating table, particularly those countries who have huge trade surplus with U.S. See my earlier update on Trade Deficit and Trade Surplus update last Sunday. Some may put retaliatory tariffs. That may aggravate the situation. But every country wants to do business and look for prosperity. We can't cliff on one hand. Having said that, we are still in an unprecedented time of uncertainty. All these may take time to settle. So, what should we do as an investor?


My thoughts: If the stock futures are any indication then we may see another blood bath on the street tomorrow. But I will watch tomorrow and may add some small positions. Agreed, it's chaotic, but we say see some light at the end of the tunnel. The reason is, we are approaching to Q1 earnings season. Of course, Q1 earnings may not be good and guidance by the companies would be very cautionary. Secondly, negotiations should begin and that may bring some positive momentum in this dark cloud. Third, next discussion will be tax cuts and de-regulations which would be positive news. So, I may take a cautiously optimistic approach. I may be totally WRONG!! So, let me remind that we are in a chaotic situation, so any position added should be seen in trading perspective. If someone is not comfortable then better to wait on the sidelines. Because there is still lots of uncertainties. 


One Mag. 7 Stock that I will Sell tomorrow morning: Microsoft (MSFT). This company has been lagging in earnings for last couple of quarters and all momentum is gone. I do not expect a great quarter. I have a small position on this and will get out tomorrow morning. If things get better, I will re-visit. It will be removed from my blog portfolio. 


NOTE: These are just my personal opinion and not a suggestion to buy/sell any equity.

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