“In investing, nothing is certain. The best investments we have ever made, that in retrospect seem like free money, seemed not at all that way when we made them.”
— Seth Klarman
The Trump tariffs.
They’re all over the news.
We’ve seen them affect the stock market in a pretty negative way.
We even had a deal blow up as a result.
We spent seven months working on a business project.
The plan was to buy a mid-sized business that would have brought in $27 million in sales.
Part of the business relied on shipping items from China.
You can see what happened next.
The tariffs impacted the deal and now it’s no longer going through as of the time of writing this.
That’s part of what inspired today’s blog.
Today, I want to give my thoughts on the recent tariffs.
I want to describe what they are, how investors should react to them, and what we see as the short- and long-term results.
Let’s jump into it!
1. How Tariffs Impact Business Costs and Profit Margins
Tariffs are a fee charged when products are being imported into the US.
They can affect any type of product, no matter the cost.
Trump has imposed tariffs on basically all countries around the world.
Primarily, he’s targeted China.
That creates a problem when you’re buying a company that brings in products solely from China.
At the time of writing this, there’s a 145% tariff on Chinese goods.1
This was temporarily reduced to 30% but might be higher by the time you’re reading this!
China joined the WTO in 2001.
Since then, they haven’t been great at abiding their agreements.2
One of these instances is the trade deficit between the United States and China.
We export far less to China than we bring in.
This hollows out the manufacturing.
We do have reserve currency to combat this, but there are problems with that model.
Triffin’s dilemma talks about this.
Robert Triffin was an economist and senator who said there was a conflict of interest when it comes to global reserve currencies.
Reserve currency can hollow out.
Manufacturing sometimes goes overseas and jobs are lost.
In return, we get the privilege to buy things at a very cheap level.
Whatever we have in deficit, China has in surplus.
They sell us that surplus.
But, again, we’re not exporting nearly as much to them.
We try to balance that out by paying countries like China in dollars, which are worth more than many other currencies.
They then exchange those dollars to buy American goods.
However, that’s not usually what China does.
Instead, they take the cash and put it back into treasuries.
That’s how the deficit stays put.
They also don’t honor American intellectual property, producing cheap knock-offs to sell at a mass market scale.
The tariffs are partly an attempt to bring those manufacturing jobs back.
But there are still a lot of consequences that come from that.
2. What Business Owners Should Watch For
One of the consequences falls on us as investors and business owners.
There is now a lot of uncertainty.
No one knows what is going to happen.
What are the long-term effects of these tariffs going to be?
Markets hate that.
A lot of CEOs have even thrown around recession predictions.3
Anyone with business dealings in China is scrambling to decide if they’re going to stick it out or move on.
Capital investors are holding back.
It’s very difficult to be an investor right now.
Warren Buffett talks about this.
He says when you have long-term certainty, there’s going to be more inflation.
The economy will continue growing.
There are more people in the world every day.
We know there’s opportunity, but there’s short-term uncertainty.
You may not realize it, but short-term uncertainty is actually the friend of the long-term investor.
Wall Street is scrambling because they rely, in part, on the short-term.
Many companies and company owners are stock traders.
They want short-term gains, and they can’t get them in an environment like this.
However, if you’re a long-term investor, you have the opportunity to do very well.
3. Strategies to Mitigate Impact
Regardless of if you’re a short-term or a long-term investor, you probably want to mitigate the impact of the tariffs.
That’s why we have more assets than just real estate.
We’re also invested in things like precious metals, aka investments that you can’t create more of.
The Fed will continue creating more and more currency, which can threaten those types of investments.
If you can buy a business that makes sense, you absolutely should!
Just make sure you figure out how to finance it and make sure it will hold in the long term.
We’re currently looking to buy either US-based companies or companies that do not rely on China.
We’re continuing to put money into things we feel are super valuable.
We still do real estate and other businesses.
Debt funds are also awesome.
There are ways for investors to take advantage of opportunities like this.
You just need to pay attention and diversify.
Now I want to hear from you!
How do you see tariffs impacting your life and business?
Stick that in the comments below.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. LaRocco, Lori Ann. “First Chinese Freight Ship Goods Hit with Trump’s 145%-plus Tariffs Arriving at U.S. Ports.” CNBC, May 9, 2025. https://www.cnbc.com/2025/05/09/first-chinese-goods-145percent-plus-tariffs-arriving-us-ports.html.
2. Hass, Ryan, Madiha Afzal, and Philip H. Gordon. “Issues in China’s WTO Accession.” Brookings, July 28, 2016. https://www.brookings.edu/articles/issues-in-chinas-wto-accession/.
3. Lake, Sydney. “More than 60% of CEOS Predict a Recession or Slowdown in the Coming Months: ‘This Uncertainty Needs to Stop.’” Fortune, April 14, 2025. https://fortune.com/2025/04/14/recession-outlook-60-percent-ceo-survey-slowdown-trump-tariffs
