15% tariffs are not high enough for companies to stop trading, investing, and exporting their goods and services… Trump’s tariff billions come from consumers

by

Economists are having trouble understanding why stocks are at all-time highs.
Well, technically, they are not measured in currencies other than the US dollar, like the euro, but in local currency terms, yes.

According to economic textbooks, tariffs hamper free trade, cause investment uncertainty, and lead to suboptimal economic outcomes.
The reality is that US companies benefit from protectionism, while foreign companies just increase prices. In addition, 15% tariffs are not high enough for companies to stop trading, investing, and exporting their goods and services, but they do lower the required risk premium as risks and uncertainty have decreased.

Trump has a lovely way of framing how many billions of dollars flow into the coffers of the US Treasury. But unless he gives that money back to the US consumer, he actually stole that money from his citizens.
As long as the US consumer continues to spend, everything is fine. Economists should focus on spending, not how tariffs theoretically interfere with free trade, causing economic pain.

I think the US consumer will be the key reason that Powell will start cutting rates again, perhaps as early as September, but more importantly, will cut many more times in 2026 than is now expected.