Reciprocal Tariffs explained...

Greetings Scott campbell your investment advisor

I want to take just a few minutes of your time to discuss tariffs.

I watch business and investment content all day long. With respect to tariffs the media is doing what is does with most topics. Make a one sided presentation designed to create fear in the public, which creates interest in their platforms which generates advertising revenue.

All you hear from the media is tariffs bad, tariffs bad, global trade war. It never ends.

I am going to explain reciprocal tariffs. I am not trying to sell you on them, but rather to explain them to you so you can make up your own mind. As with all my explanations, I rely on facts.

First fact - most countries put tariffs on U.S. products imported into their country. The tariffs make U.S. products more expensive and therefore less attractive to consumers in that country. This was and is done, and blessed by the U.S. forever, to allow the manufacturers in these countries to thrive and succeed.

Prior to Trump’s tariffs, the U.S. put very few tariffs on foreign goods imported into the U.S. While most countries put tariffs on U.S. goods and their tariffs, in some cases are very high, up to 100%.

I heard an excellent example of how reciprocal tariffs work yesterday. And I want to share it with you. Finally the whole picture explained very simply.

Reciprocal tariffs are used to eliminate tariffs on U.S. goods imported all over the world.

Let’s take vodka. Something most people can relate to.

A lot of people favor Grey Goose vodka which is produced in France. Grey Goose is imported into the U.S. with no tariff. A bottle of Grey Goose sells for about $35 here in the States.

A lot of people like Tito’s vodka. That is produced here in the U.S. France (and Europe) charges a 100% tariff on all vodka and spirits imported from the U.S. So no one buys Tito’s in France because it is too expensive.

If the U.S. applies a reciprocal tariff on Grey Goose, the price of a bottle will jump to $70. Not many people will be willing to pay that much for even Grey Goose. Sales of Grey Goose in the U.S. will disappear.

Consumers here will likely look for an American vodka because it is cheaper. This increases sales and production of American vodkas. Which will lead the producers of American vodka hiring more employees.

And what will France’s response to the reciprocal tariff be? They have to do something because Grey Goose has lost a significant portion of its sales. They would be crazy to raise the tariff on Tito’s. They will drop the tariffs on U.S. vodka.

Which means tremendous new markets for American vodka in France and Europe. Which means more sales, production and jobs here in the U.S.

So there you have it. The whole story on reciprocal tariffs. Love em or hate em, at least you understand them.