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Macro Monday - Will Protectionism Be Different This Time?


  • Another set of tariffs has allies up in arms this time.
  • Are we looking at a trade war and recession, or much ado about nothing?
  • Markets are shaky as uncertainty takes center stage.
  • An interesting take on oil, inflation and the dollar.
  • Subscribers to Margin of Safety Investing received "Macro Monday" earlier in the day.

President Trump announced last week that his administration would be putting a global tariff on steel and aluminum. This comes just days after I published (Editor's Pick) "Welcome To President Trump's Economy And Markets,"which included "protectionism" as one of four key factors in determining where the economy and markets were headed.

The knee-jerk reaction to the tariffs by pundits, academics and European Union mouthpieces were to use the buzzwords "trade war," "retaliation," "recession" and "crash" a lot. Despite President Trump's petulant way of saying things, I'm not so sure that a tariff on steel and aluminum is that big of a deal, or at least maybe it shouldn't be.

Steel and aluminum are clearly strategic industries, there has no doubt been dumping by a handful of global competitors and it shouldn't take much to exempt Canada and Mexico from the tariffs as that's both right and good, so, doing the tariffs in the first place does carry some merit. The fear, of course, is that the Trump administration is clueless and things spiral out of control.

Ultimately, the tariffs might have the most impact on oil prices. This is important because cheap oil is the key "transitory" factor keeping inflation subdued. If oil prices rise to $80, as I have projected, then inflation will rise most likely past the 2% target. That might be just what the Trump administration wants.

The Impact of Protectionism

In general, we know that protectionism is a detriment to global trade and usually results in broad based economic pain. However, the threat of protectionism and in measured amounts can in theory induce even more open markets. That is at least what one of the Trump Administration's stated goals is with the recent tariffs on the strategic industries of solar panels, steel and aluminum (there were also tariffs on washing machines, I am

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This article was written by

Kirk Spano profile picture
Award Winning Kirk Spano's All-In-One Investing Service

25+ years of beating markets with less risk. Margin of Safety Investing. "The three most important words in investing are margin of safety." - Warren Buffett 

Get my Macro view and analysis of secular trends which led to my being named "The World's Next Great Investing Columnist" at MarketWatch. Join our investing group to get ETF asset allocation, top growth & dividend stocks, as well as, learn a repeatable approach to option selling for making more retirement income.

I own and operate Bluemound Asset Management, LLC - a boutique registered investment advisory that manages and consults on 9 figures of wealth. I was lucky to have several mentors who managed billions of dollars, including, one who literally helped write the book on option selling. I have now managed money since the 1990s through several major market cycles. 

In the past decade I have worked on private equity led real estate projects, as well as, consulted to several private equity firms, hedge funds and family offices. I currently actively help accredited investors find sustainable real estate investments through private equity. 

Since 2011, I have been widely syndicated and appear as an investing expert in the media. Follow my work, as I try to help you make great returns with less risk.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I own a Registered Investment Advisor - https://BluemoundAssetManagement.com - however, publish separately from that entity for self-directed investors. Any information, opinions, research or thoughts presented are not specific advice as I do not have full knowledge of your circumstances. All investors ought to take special care to consider risk, as all investments carry the potential for loss. Consulting an investment advisor might be in your best interest before proceeding on any trade or investment.

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