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Editor’s Note: Late last week, Eric sat down with Charles Sizemore, Chief Investment Strategist at our publishing partner, The Freeport Society, to discuss the Trump 2.0 tariffs and the resulting market selloff. Charles shared that video with his readers at The Freeport Navigator last Friday. And we had planned to share that conversation with you here today…

Then, this afternoon, President Donald Trump announced a 90-day pause on his new “reciprocal” tariffs for most countries. The 10% baseline tariff remains in place for all, and the tariff on China has been raised to 125%. So while the trade war isn’t over, the landscape has shifted meaningfully since Eric and Charles recorded their discussion.

Still, we believe their insights are highly relevant – and worth your time. So, we now present their conversation in full. Here’s Eric…

Hello, Reader.

Imagine your sitting down with a longtime friend. 

Suddenly, they place their hand on the table, pull out a hammer, and slam it down onto their poor, unexpecting phalanges.

Ouch!

You watch them do it again… and again… and again.

At some point, you think they’ll have to stop. Surely the pain will become unbearable.

That’s exactly how it feels watching President Trump’s global tariffs play out. Simply put: It hurts.

But the hope is that, eventually, the pain will force him to stop bringing the hammer down.

Now, some folks are applauding President Trump’s new trade war as a stroke of tactical genius – a savvy game of macroeconomic “chicken” that will force the 185 countries subject to his new tariffs to buckle under the pressure and lower trade barriers.

But the stock market is issuing a very different verdict. It is judging the new tariff regime to be a massively destructive economic force – one that will cause both global commerce and economic growth to atrophy severely.

Only time will tell which assessment is correct, but history has weighed in on this topic several times already.

That is why, late last week, I sat down with my colleague Charles Sizemore, Chief Investment Strategist at our publishing partner, The Freeport Society, to discuss Trump’s “Liberation Day” tariffs. Charles is a market veteran of 20-plus years, dedicated to helping people achieve financial freedom through smart investing in this Age of Chaos.

In the video, Charles and I discuss what you should do now to not only preserve your wealth… but continue to grow it through this turmoil.

Click on the video to watch now. You can also read the full transcript below.

My advice is to stay the course and ride through this painful, gut-wrenching volatility. In fact, rather than selling into weakness, I would advise nibbling on some of your favorite positions at these lower prices.

Stock market selloffs are brutal events, but they sow the seeds of future wealth generation if you are bold enough to make some buys when most folks are selling.

Regards,

Eric Fry

Editor, Smart Money

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Transcript

Charles Sizemore: Hi. This is Charles Sizemore, Chief Investment Strategist at The Freeport Society.

Do you feel liberated? We are now post-Liberation Day. We are now seeing the aftermath of the big tariff announcement that was made on Wednesday. So, to help me unpack that, what it might mean for us, and what we should do with our money as a result, I brought on Mr. Eric Fry, Editor of Fry’s Investment Report.

Eric, thanks for being on.

Eric Fry: It’s great to be here, Charles. Thanks for having me.

Charles: So, before we get started, I do want to roll out a couple of numbers because this is very relevant to our discussion. So up until very recently, Apple Inc. (AAPL), Microsoft Corp. (MSFT) – Nvidia Corp. (NVDA) came close – they were all in that mid $3 trillion market cap range, or roughly $3.5 trillion. In some cases, even a little bit higher. I want to say Apple actually touched $4 trillion for a while.

To put that in comparison, the entire current market cap of the UK market, every stock that trades in the United Kingdom, is $3.4 trillion. France also about $3.4 trillion. Germany, it’s lower, it’s about $2 trillion. Japan, it’s a little higher, about $6 trillion.

We were in a situation… And we still are, in fact. Market caps have come down a little bit, but not that much, where we had single stocks in the U.S. worth more than the entire stock market of some of our biggest trading partners.

I don’t know about you, but that doesn’t really seem sustainable to me. All things are relative. And well, I’ll let you comment on that. What does that tell you?

Eric Fry: Even before this tariff announcement yesterday (April 2) and the threat of tariffs started, I have been suggesting, starting back around probably December, January, that it was time for these big names to hand the baton to other stocks, other sectors, other markets. And I did highlight a few overseas markets.

And that was both a function of valuation and also a function of where we were and still are, to a great extent, in the investment and profit generation cycle. So, if you look at the great big names, the Mag 7 names, they had invested a ton of money a few years back. And as a group, were largely reaping the rewards of those investments – generating huge sales, fat margins, et cetera.

But now, starting last year, they were entering a new phase where, because of the need to invest spectacular sums of money to maintain an edge in AI technologies, I thought we were seeing a new phase where they were going to have to be spending a ton of money again, and not generating commensurate sales growth. And so, these highly valued companies were likely to, best case, tread water, and I thought more likely trend lower…

Charles: Before you go any further, let me just add to that. These are the finest companies arguably ever made. These are money-minting machines. They’re not immune to the laws of economics. When they have to make very large investments in their future, that is a suck on cashflow today. It affects their profitability today.

Eric: Exactly. And then you always have the law of large numbers. It’s easier to grow a $10 million company into a $20 million company than it is to grow a $3 trillion company into a $6 trillion company, simply because the sources of revenue potentially out there, the total addressable market, is not as large anymore, relative to the company itself. So, it becomes tougher and tougher.

Yeah, they’re all great companies. Most of the Mag 7 I consider great companies.

Charles: Hold on now. You can’t make a comment like that. That’s a tease. So which ones aren’t? Now you’ve got me curious. I probably agree with you, by the way, but I’m just curious where you’re going with this.

Eric: I don’t want to make any enemies here. I would say that one of them is slightly less great. That would be Tesla Inc. (TSLA), in my opinion.

Tesla is a pioneer, has been a pioneer, run by a pioneering founder, and who’s demonstrated the capability to succeed in a number of markets. Including now in satellite communications and space technology and so on.

But Tesla, as it sits today, I think is a highly vulnerable company. And so that’s all I have to say about it.

Charles: I would just add to that, I agree. Of all of the companies that make up the Mag 7, I would say they have the shallowest moats.

Eric: Exactly. That’s really what I’m saying. We agree.

Charles: Yeah.

Eric: Yeah. Overlaying all of this, there was a lot of… Call it irrational exuberance or rational exuberance, I don’t know, post the presidential election where a lot of investors thought that Trump’s presidency was going to be great for the stock market.

So, a lot of people were buying the rumor ahead of the fact. It was all through November, December, into January, investors very excitedly buying stocks. And I thought that could very well be the last hurrah for this phase of the techie component of the bull market. It was a one-decision stock market. You just buy Nvidia or a Mag 7 company and you’re good to go.

Those kinds of very narrow, robotic bull markets usually die. And so, I’ve been expecting money to fan out into other names and into other markets. I had been recommending companies in the pharmaceutical industry and many, recently, overseas stocks, overseas markets where I thought the prospects were better.

Charles: Eric, before you go any further, I do want to point out some of your bona fides here. I am very proud to say that my first introduction to you was over 20 years ago when I read the book you wrote about ADRs back when that was uncharted territory for most investors.

You’ve been actively researching international stocks for a couple decades now. You are absolutely not a Johnny-come-lately here. You’ve seen international stocks go in style, out of style, back in style again, out of style again. You’ve seen a few round trips on this.

Eric: It’s actually been 31 years since that book hit the shelves. Three decades.

And yeah, there is a cyclicality to financial markets, all financial markets.

And broadly speaking, international investing has been out of favor for close to a decade. Whereas previously, if you go back to the 2000s… or a little bit farther, into the late 1990s when we had the big dot-com bubble, technology bubble that was developing and then ended up busting in 2000…

For a decade, it was really tough to make money in the U.S. stock market, a decade after that bubble burst. And there were some pretty harrowing declines throughout not just the tech sector, but across the U.S. markets in general.

But during that period, you could have made a lot of money in a lot of overseas stock markets. And in certain sectors, metals and mining, agriculture.

Charles: Eric, I actually jotted down some numbers before we started. Let’s go to that post-2000 market.

Throughout the ’90s, what was the story? Tech, U.S. tech specifically, and the more speculative and cutting edge, the better.

We know what happened. There was a bear market that started in 2000 that bottomed out by the end of 2002, beginning of 2003. So, between the nasty bear market at the beginning of the 2000s and the nasty bear market at the end of the 2000s, there was this window of about four years, between 2003 and 2007, where the markets did well. The S&P 500 did well. Tech stocks did fine.

However, the EAFE international index, which basically includes all the major markets without the U.S., went up about 180% in that window, which was roughly double the return on the S&P 500.

Now, emerging markets did even better. They were up about 400%, and some individual emerging markets did even better than that. So, as you were saying, there are times when non-U.S. markets really beat the pants off the U.S.

Eric: Right. I mean, the Brazilian market put up a 1,000% gain in that window. I don’t know exactly the timeframe, but it was in that period. And that was both a function of dollar weakness and primarily equity strength, Brazilian equity strength.

So I have been suggesting recently that we are likely to see something that looks like a replay of the early 2000s. I mean, you can’t really tell too much from one day’s activity, but in today’s trading action, we are seeing the Brazilian ETF EWZ is up, MAXI ETF is up, there’s a number of European stocks that are up.

Charles: I might add, as we’re recording this, the S&P 500 is down about 4%. So that puts it in perspective.

Eric: Right. And I just did a quick and dirty look. There’s an index that tracks the Mag 7 stocks. That index, as of today, is down more than 20% from its late-December peak. So, it’s in correction territory. And the S&P is down about 10% over that same timeframe. So, the Mag 7 is doing way worse than the S&P.

But in that identical window, you have things like the pharmaceutical index up. Not much, but up 3%. EAFE is up 7%, the international index you were just referring to. And then the European ETF is up 12%. So again, a fairly short window, we’re only talking about four months here – not even four months.

But I think this trend is indicative of the trend I’m expecting to unfold over the next year or two or three, with a couple of gigantic caveats. And one is that analyzing economic trends, macroeconomic trends – which is where I tend to specialize – and then analyzing individual stocks to participate in those trends, is extraordinarily difficult in a Trump regime.

I’m from California. I guess it’d be like if you had a 7.1 earthquake, and it just never stopped. You’re just constantly trying to get your footing, not knowing what’s coming, what might change, how quickly it might change. So that’s not a normal investment environment.

Charles: Actually, Eric, I want to go back to that because there’s a lot to discuss there. But before we do that, I want to go back to something else you said. You had mentioned dollar weakness was one of the macro themes of that last market, roughly early 2000s to late 2000s, in that window when international stocks did so well. Dollar weakness was the norm then.

Tying that back to the tariffs, one of the stated objectives of the Trump administration in all this tariff business is they want to boost U.S. exports relative to the rest of the world. They want to bring our trade more into balance. Whether that’s a good policy or a bad policy, we can talk about that at a different time, but that is their objective. Their objective is basically to balance our trade deficit.

Well, one of the easiest ways to do that is to revalue the currency. That’s one of the oldest tricks in the book. If you want to export more, you make your currency cheaper. That’s not necessarily good for the consumers in that market, of course, because everything they buy becomes more expensive. But that’s the game, right?

And so coming back to under what conditions do foreign stocks tend to outperform, if dollar weakness is part of that, then I think we are very likely to see that going forward. The dollar’s been very strong lately, partly because it’s been viewed historically as a haven. But if you do have an administration that’s stated objective is to boost export competitiveness, then they will lower the value of the dollar. That is almost a given.

Eric: Yeah, I think you’re right about that. One problem with using tariffs to achieve that goal is that tariffs tend to shrink the absolute pie. Even if your percentage of exports goes up, the total volume of export activity could drop significantly.

So, tariffs are a very, very blunt instrument, which is why we haven’t used them for a hundred years. It’s a little bit like if I went outside right now and I saw some bird poop on my car, and I thought, “Well, gee, I want to get that off. I’m just going to drive it off of a pier into the water, then I’ll get rid of that bird poop on my car.”

I would accomplish my goal, but my car would be under water.

Charles: At what cost, right?

Eric: And if you look at the history of tariffs of this size, we have to go back a hundred years. The last three times that we had things like this was 1890, 1897, and 1930.

Charles: And there was a common theme of what followed after each one of those events.

Eric: I took a look at it again yesterday. During the first six years of those tariff regimes, the first one, the stock market fell 24% over those six years. The next one, stock market fell half a percent. That means it went nowhere for six years. And the last one, it fell 42% over six years, after first falling 70%. That was during the Great Depression. And then you had the Panic of 1893 following one of them, which was like a great depression before the Great Depression.

It’s just a sticky wicket to try to use a broad-brush tariff policy. And one huge problem with it is… Okay, we can sit here and we can say it’s unfair. These trade partners, they’re unfair. But these unfair trading patterns and supply chains took years, if not decades, to develop, right? It’s not easy to just move some production facility from here to there and then have the supply chains that feed it and so on. It takes a really, really long time.

Charles: And by the way, Eric, going back to another one of your points, you said that one of the problems with investing or forecasting in the Trump years is things change quickly.

So if you are thinking, “Okay, this is a new regime, I’m going to move my production to California, to Florida, to Texas,” to wherever, you’re not going to do it instantly. Even if you could move it instantly, you’re not going to because you’re going to wait and see if the policy changes next week. You’re going to be conservative. You’re going to bide your time.

Eric: There are literally companies in the stock market today, and they will suffer, who moved production from China to Vietnam under the last Trump administration to become more U.S.-friendly, to not be producing in China.

And now today you’ve got these sky-high tariffs on Vietnam. And in some of these industries, we can talk about it all we want. Oh, we got to bring them home. Well, we probably don’t want to bring home a lot of textile production. It’s massively water-intensive, it’s dirty. I mean, do we want to be doing it here? I don’t know. Probably not.

Charles: I don’t imagine a world in which my kids are stooped over a loom making textiles.

Eric: All I’m saying is that there are some businesses that – yes, we can do them, but maybe we don’t really want to as a nation. There’s many, many, many that we do and we would love to have come back here. And that trend has already been underway. We’ve been reshoring industries at a very rapid clip for about six years. So that started at the end of the Trump administration, continued at the same trajectory through the Biden administration, and is continuing today. That trend has already been in place. And I think we should be encouraging it, for sure, but I don’t think this is the way to do it.

Charles: There are more subtle ways and more gradual ways. You can use the carrot instead of using the stick. And we were doing all that, by the way. As you said, the trend was already in place. It seemed like a really unnecessary escalation that’s going to backfire.

Eric: Yeah. It ends up being just a scary time now. Now what? And as I said before, because of how quickly things change, it is hard to really handicap using traditional investment analysis. You have to make a lot of guesses about what a non-traditional politician and a non-traditional economic policy is going to look like tomorrow.

So having said that, I’ve just been maintaining course and speed by fanning out into the foreign markets and individual sectors of the U.S. economy that stand the best chance of performing well, no matter what comes.

And today on my screen of recommendations that I track every day, it’s pretty red. And the only exceptions out there are a few in the pharmaceutical area that are up today, and a few foreign stocks that are up today. But most of the rest are… There’s not really a place to hide.

Charles: Well, so let’s talk about that and we can bring this full circle.

What is your advice to investors today? What do we want anybody viewing this to take away? What do they need to do when they get back to their desk or get back to their phone to start buying or selling?

Eric: It’s always this way in the stock market. And people always want to know. How do I hedge? How do I protect myself? What do I do? And there aren’t a lot of answers.

Investing is pretty binary. You’re either in stocks or you’re not. And if you’re not in stocks, you’re in some other asset. And the range of assets that are not correlated with stocks is pretty low. That list is short.

There’s cash which is directly not correlated. It’s inversely correlated, to the extent that a stock falls, your cash is worth more money. So that’s the only one, literally, that is a direct hedge.

Gold is often a hedge, but it’s not perfect, and gold stocks even less so because they’re stocks. Real estate, also a hedge. Not perfect. Real estate often falls in a severe recession, just like stocks do.

Charles: As my professor said back in undergraduate finance, the only perfect hedge is in an English garden. You’re never going to be able to perfectly hedge yourself, but protection is still protection.

Eric: Exactly right. I don’t sugarcoat it. If you’re scared, there is only one true option. That’s to go to cash.

I think that there are middling options, and that’s what I’ve been talking about. There are things on my screen today that are green, and I’ve been advocating buying mostly those kinds of names over the last six months because of my sense that the U.S. stock market was pretty fully valued and that you weren’t going to make a killing there. Best case, probably go sideways. Worst case is what we’re seeing now.

So, I think you can safely-ish continue investing in select opportunities overseas and then in two or three of the sectors in the U.S. market. But I’ve had recommendations in the oil and gas industry for the last year and a half that have been doing fantastically well, and today they’re getting annihilated because of the fear that recession is going to destroy demand for oil and gas.

Charles: You use the R word. I would say at this point it does look like the market is pricing in a recession. And we’ve seen some evidence.

The Atlanta Fed’s GDPNow is forecasting the economy is going to shrink by about 4% when they release the first quarter numbers in the coming weeks. Second quarter, I don’t even want to know. So that’s where we are.

Eric: But again, this all could go away literally in a week. I don’t think it will entirely, but I think a lot of it could go away.

It’s like watching someone hit their hand with a hammer. You watch it and you think, “Well, gee, it’s got to hurt. They’re probably going to stop at some point, right?” And they just keep hitting their hand over and over and over again. That’s how it feels watching this global tariff policy play out over the last 30 days, is that it hurts. And at some point, you would think that there’s enough pain that the message might percolate up into the White House and they might modify the policy.

I would point out a little historical curiosity. The president doesn’t actually have the constitutional power to enact tariffs. That’s a congressional power. But that’s so a hundred years ago.

Charles: That’s funny. You’re one of the only people I know that has actually made that point. I’ve made it privately, but the president can make tariffs in the case of national emergency. There are limited scenarios in which the president has the authority to levy tariffs. It’s really a stretch. The president does not have the authority to just arbitrarily rewrite trade policy though, and I don’t really see anybody stopping that problem.

Eric: Yeah. I mean, this is one of those things that we’ll be discussing in political science classes years from now. This isn’t the only power that the executive in power now is claiming. It’s a different time. So, for better or worse.

Charles: It is indeed.

Well, let’s wrap this up. To summarize for our viewers… Look, U.S. stocks are still some of the best companies in the world, I would say the best companies in the world, but the best companies aren’t necessarily the best stocks or the best investments in any given window.

And what we’ve seen today, the conditions seem to be lining up, and we could have a repeat of what we saw in the 2000s where the American companies didn’t stop being great, they didn’t stop being the best in the world, but they were distinctly out of favor for several years relative to large pockets of the world. That was, of course, aided by a weaker dollar during that period. All of those conditions lined up to create that environment.

It looks like we may be in a similar environment today, which doesn’t mean you should dump all U.S. stocks and hide under a rock, but it does mean you should really strongly consider diversifying. You should look overseas. You should definitely cast your net wider.

Eric: I emphatically agree, Charles. I mean, there were long periods of time when companies like Amazon.com (AMZN), Netflix Inc. (NFLX), and others were fantastic companies, operating brilliantly on the ground, at ground level, but their stocks were bad for a while. Right? It happens. So, there’s a disconnect between what happens on the ground and in the stock market sometimes, over long periods of time. It just depends.

Charles: Exactly.

Well, Eric, thanks for being on today. This was great. It’s nice to get some fresh perspective. We’re definitely giving the viewers information they’re really not going to get elsewhere, or at least if they get this information elsewhere, it might be two or three years from now. They heard it from us first.

Eric: Right.

Charles: Thanks for being on, and I hope to have you on again soon.

Eric: Thanks a lot. Appreciate it. Take care.

Charles: And to everybody viewing, thanks for tuning in today.

This is Charles Sizemore signing off.

To life, liberty, and the pursuit of wealth.

The U.S. stock market is currently experiencing one of its worst crashes in history. And unfortunately, we’re not being dramatic.

Last Wednesday, so-called “Liberation Day” tariffs were officially announced; and the fallout was swift and brutal. On that Thursday and Friday, the S&P 500 fell more than 10% – something that has only happened five other times in the past 100 years:

• During 2020’s COVID Crash
• In the depths of the 2008 Financial Crisis
• On Black Monday in 1987
• When Germany invaded France in 1940 and began World War II
• During the Great Depression in the 1930s

What just happened was rare and meaningful. It was a moment where markets clearly said, “This trade war might actually change everything.”

But will it?

That’s the trillion-dollar question. And the honest answer is: no one knows for sure.

That’s because the wild card here isn’t just tariffs – it’s the unpredictability of the White House behind them.

One day, there’s talk of negotiations… The next, threats of 104% tariffs on China. 

For example, over the weekend, a viral post by hedge fund manager Bill Ackman that suggested a 90-day pause to calm markets gained traction. On Monday morning, stocks surged on a rumor that the White House liked that idea.

Then came the denial: “Fake news.” Tariffs are staying. 

More threats followed. The rally was erased, and stocks tanked again, sinking another 2% between Monday and Tuesday.

This administration is playing an erratic game. But our analysis suggests there are three distinct scenarios that could play out from here, each with very different implications for your money.

Let’s walk through them.

Scenario 1: Hardball Negotiation (50% Probability)

In this scenario, the tariffs are exactly what they appear to be: a negotiating tactic. Trump is trying to strong-arm America’s trading partners into better deals. Yes, it’s chaotic. But ultimately, it’s strategic.

You can see the signs of this approach:

• President Trump’s threat of an additional 50% tariff on China after their 34% retaliation
• Peter Navarro dismissing Vietnam’s offer to cut U.S. tariffs to 0% as “not enough”
• The White House insisting these tariffs are about “long-term fairness,” not short-term market impact

In this world, the tariffs are leverage, not ideology. And once new deals are struck, Trump will roll them back, markets will breathe a sigh of relief, and the global economy will resume its march forward.

What happens to stocks here? We’d expect more near-term volatility; possibly more selling over the next few days or weeks. Once deals are signed, a sharp, V-shaped recovery – and a full rebound into summer – is quite possible.

In this case, the playbook is:

• Stay defensive in the short term (cash, bonds)
• Watch for signs of real progress in negotiations
• When clarity arrives, rotate into growth, tech, and risk-on assets

We think this is the most likely path forward, which is why we’re assigning it a 50% probability.

Scenario 2: Tariffs As True Protectionism (30% Probability)

Now, in this scenario, Trump’s tariff policy is not just strategy. It’s ideology.

He doesn’t just like tariffs as a negotiating chip. He genuinely believes in them as a tool to reshape America’s economy, wherein tariffs bring jobs home, protect domestic industry, and realign global trade in the U.S.’ favor.

In this version of reality, the tariffs aren’t going anywhere. The White House might make a few token deals, but the big ones – the 54% on China, 46% on Vietnam, 20% on the EU – stick around.

This is the 1970s redux… Or worse, the 1930s. Global trade slows. Supply chains freeze. Inflation spikes. Corporate earnings shrink. The Fed can’t easily help without stoking more inflation.

This scenario results in a grinding, multi-year bear market.

What works here?

• Hard assets: Energy, gold, metals
• Domestic infrastructure: Think reshoring, factories, defense
• Dividend stocks: Not sexy but stable

What doesn’t?

• Multinational growth stocks
• Global consumer brands
• Anything reliant on cheap trade and smooth global logistics

This is a stagflation scenario, with slow growth, high inflation, and no easy way out.

We don’t think it’s the most likely path forward, but it’s definitely on the table. We assign this one a 30% probability.

I’m not going to beat around the bush, folks. The first five trading days of April were devastating.

The S&P 500, Dow and NASDAQ all sold off hard, with all three indices falling more than 10%. Few stocks were spared, as the baby was thrown out with the bathwater.

In fact, Bespoke Investment Group pointed out that the stock market’s three-day plunge (April 3, 4 and 7) was one of the worst three-day trading spans since late 1952.

Percentagewise, this recent three-day decline is comparable to the COVID-19 pandemic and the 2008 Financial Crisis. According to Bespoke, the only three-day decline that was worse occurred during the 1987 crash.

The fact is Wall Street had a very emotional response to President Trump’s so-called “Liberation Day” tariff announcement last Wednesday.

But, as I have discussed in recent Market 360 articles, the Trump administration has a few primary goals with the reciprocal tariffs. So, today, I’m going to briefly recap them, and then I’m going to share three green shoots that are emerging despite this volatile period. Plus, I’ll reveal what investors should be watching for next, as this event could make or break portfolios.

Markets surge then lose gains … what is a good trade deal? … Trump might have bigger ambitions … the dangers with an alleged Trump plan … how to handle the volatility today

Though the gains have reversed and turned to losses as I write Tuesday afternoon, stocks ripped higher this morning on hopes that trade deals will be getting done.

From The Wall Street Journal:

Treasury Secretary Scott Bessent said the Trump administration was open to negotiating deals to reduce tariffs, and denied the market selloff had led the White House to change its approach…

“I would say the negotiations are a result of the massive inflow of inbound calls to come and negotiate,” he said…

“I think you’re going to see some very large countries with large trade deficits come forward very quickly,” he added. “If they come to the table with solid proposals, I think we can end up with some good deals.”

Here’s a question…

Vietnam has proposed lowering its tariffs to zero. Is that a “good deal”?

Not according to White House trade advisor Peter Navarro. Here was his response yesterday:

When they come to us and say, “we’ll go to zero tariffs,” that means nothing to us because it’s the nontariff cheating that matters.

It means “nothing”? Really?

Okay, here’s another question…

European Commission President Ursula von der Leyen suggested “zero-for-zero” tariffs with the U.S. for industrial goods, including cars.

Is that a “good deal?”

Apparently not. Here’s Newsweek:

Trump was asked whether [von der Leyen’s suggestion] was “enough” by a reporter in the Oval Office to which he replied:

“No, it’s not. The EU has been very tough over the years, I always say it was formed really to do damage to the United States in trade, that’s the reason it was formed.”

Now, even if our trade relationships with Vietnam and the European Union include warts that must be addressed beyond a 0% tariff rate, if freer, fairer trade is the goal, shouldn’t these proposals of 0% tariffs at least warrant some positive acknowledgement?

The absence of such positive acknowledgement prompts a question…

Is there a different end goal in mind?

On Saturday, Fox News ran an opinion piece that speculated on Trump’s real purpose

The author, Tanvi Ratna, is a policy analyst and engineer with a decade of experience in statecraft at the intersection of geopolitics, economics, and technology. Point being, whether you agree with her or not, she’s not coming from out of left field.

Ratna suggests that Trump’s real goal has less to do with “unfair” tariffs and far more to do with unsustainable debt and a complete economic restructuring:

In 2025, the U.S. government must refinance $9.2 trillion in maturing debt. Some $6.5 trillion of that comes due by June.

That is not a typo—that is a debt wall the size of a small continent.

Billions of dollars of debt expense are potentially on the line. Based on data in the article, each basis-point increase in interest rates would put the government on the hook for roughly $1 billion per year – huge motivation for lower interest rates.

Unfortunately, at the start of the year, the 10-year Treasury yield sat at the painfully high level of 4.80% after surging nearly all last fall.

What could bring it down?

Not the Fed.

With the specter of reinflation looming in January, the Federal Reserve appeared to be in no hurry to cut interest rates. And even if it was, the bond market wouldn’t necessarily follow suit.

As we covered in the Digest last fall, after the Fed’s first rate cut last September, the Fed Funds rate and the 10-year Treasury yield diverged in historic fashion.

While the Fed funds dropped, the 10-year Treasury yield surged. The situation grew more abnormal through the end of the year as the 10-year Treasury yield hit that 4.80% level I noted a moment ago.

So, how do you get bond yields (and by extension, federal debt payments) lower when both the Fed and the bond market didn’t appear interested in helping?

Back to Ratna’s Fox News piece:

By introducing sweeping tariffs, the administration is creating precisely the kind of economic uncertainty that drives investors toward safer assets such as long-term U.S. Treasuries.

When markets are spooked, capital exits risk and equity assets (as we see with the stock market collapse) and piles into safe assets, primarily the 10-year U.S. treasury bond. That demand pushes yields lower.

It is a counter-intuitive move, but a calculated one. Some have called it a “detox” for the overheated financial system.

Now, on Sunday, White House National Economic Council director Kevin Hassett denied this is Trump’s grand plan:

He’s not trying to tank the market. He’s trying to deliver for American workers. It is not a strategy for the markets to crash.

Of course, whether this is Trump’s plan or not, Hassett must say this.

If it is the plan, Wall Street can’t be in on it. After all, “fear” is the juice that powers the desired exodus from stocks to bonds.

The rest of Trump’s alleged plan

Ratna suggests that lower interest rates are just the beginning.

The federal deficit remains enormous, and that’s where Elon Musk and his team at DOGE are supposed to slash spending. The goal is to eliminate a trillion dollars from the deficit by later this year.

If successful, that would leave just one more part of Trump’s plan: economic growth.

Here’s Ratna:

By making imports more expensive, they create space for American producers to step back in. The objective is not to punish trade partners—it is to make domestic industry viable again, even if only long enough to rebuild critical capacity…

In the meantime, tariffs themselves will generate revenue—an estimated $700 billion or more in the first year.

That creates more fiscal room for the administration to enable tax cuts and keep spending on Social Security, Medicaid and other programs.

Ratna believes Trump’s overall goal is to reduce America’s debt, reset its industrial base, and renegotiate where it stands in the global order.

If this is, in fact, Trump’s true plan then, at best, it’s a colossal gamble. And the most obvious tripwire is stagflation that could be exacerbated by corporate CEOs who – purposefully – can’t be in on the game.

The risk that inflation and corporate America don’t play along with Trump’s alleged vision

For this hypothetical plan to work, two things must happen:

• Inflation must be contained so that long-term bond yields fall and remain low.
• Onshoring must be a success, and corporate America must continue thriving

These things aren’t guaranteed to happen.

Beginning with inflation, we’ve been getting mixed messages in recent weeks.

By some measures, inflation is cooling rapidly. Truflation, an independent inflation index, reports a U.S. inflation rate of just 1.40%.

On the other hand, recent data from the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) Price Index show pressure on prices remaining firm.

The latest core CPI inflation data (which strips out volatile food and energy prices) found that prices climbed at a 3.1% pace year-over-year. Similarly, the most recent core PCE figure climbed 2.8% year-over-year, up from the prior reading of 2.6%.

Plus, inflation expectations have been climbing across the board in the wake of this trade war chaos. If expectation turns into reality, the Fed will be unable to cut rates, and the bond market will naturally climb on its own.

Speaking of climbing, the 10-year Treasury yield has surged about 32 basis points in two days. It’s exploded from 3.90% yesterday to 4.22% as I write.

Source: TradingView

By the calculations we used earlier, that’s about $32 billion extra in federal interest expense.

This is not the plan.

On our second point, onshoring and a resilient corporate climate aren’t guaranteed

Last month, a Bank of America survey found that 71% of global fund managers expect global stagflation within the next 12 months.

Meanwhile, last week, Citibank echoed this sentiment in a note to clients:

Looking out, large tariffs would move us closer to the stagflationary risks we have downplayed this past year.

This transition happens through a tightening of financial conditions which means fixed-income returns also turn negative.

The note – written before “Liberation Day” – modeled a base case of 10% tariffs, which Citi predicted could push the economy into stagflation in roughly six months. And with 20% tariffs, Citi predicted we’ll see an added “growth shock.”

Well, as we now know, many of Trump’s tariffs are multiples greater than 20%, so “growth shock” could be putting it mildly.

B of A and Citi aren’t the only Big Banks that have raised their stagflation predictions. We’ve seen similar calls from Goldman, Stifel, and UBS.

And yesterday, JPMorgan Chase CEO Jamie Dimon weighed in his annual letter so shareholders:

The economy is facing considerable turbulence (including geopolitics).

We are likely to see inflationary outcomes … Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.

The problem is that lower yields and higher growth require contradictory messaging and emotions

For the bond market, Trump needs to communicate: “I don’t care about economic pain. I’m going to do whatever I want.”

The related emotion needs to be fear. That’s the best shot at pushing down long-term yields and holding them there.

But for corporate America, Trump needs to communicate: “This is temporary and for a greater economic good. Continue your cap ex spending. Continue hiring. Continue onshoring. Trust me. You’ll be okay.”

The related emotion is confidence. That’s the best shot as supporting our economy.

Given these contradictory messages, it’s no wonder we’re hearing two different things from The White House.

On that note, this morning, when asked whether the tariffs are permanent or up for negotiation, Trump said: “They can both be true.”

The reality is that, so far, Trump is successfully delivering the first message yet failing horribly on the second.

Billionaire hedge fund manager Bill Ackman explained the impact of this uncertainty and inconsistency on corporate America yesterday on X

Here’s Ackman:

Business is a confidence game and confidence depends on trust…

By placing massive and disproportionate tariffs on our friends and our enemies alike and thereby launching a global economic war against the whole world at once, we are in the process of destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital.

The president has an opportunity to call a 90-day time out, negotiate and resolve unfair asymmetric tariff deals, and induce trillions of dollars of new investment in our country.

If, on the other hand, on April 9th we launch economic nuclear war on every country in the world, business investment will grind to a halt, consumers will close their wallets and pocket books, and we will severely damage our reputation with the rest of the world that will take years and potentially decades to rehabilitate.

What CEO and what board of directors will be comfortable making large, long-term, economic commitments in our country in the middle of an economic nuclear war? I don’t know of one who will do so.

When markets crash, new investment stops, consumers stop spending money, and businesses have no choice but to curtail investment and fire workers…

Business is a confidence game. The president is losing the confidence of business leaders around the globe.

This brings us to tomorrow, which marks the day when Trump said he’ll enact his proposed tariffs – the same ones Ackman just suggested would serve as an “economic nuclear war on every country in the world.”

We’ll see.

Despite the uncertainty surrounding Trump’s true goal, remember to maintain a cool head

In moments like these, it’s more important than ever to have a calm, informed perspective.

That’s why our team of experts – Louis Navellier, Eric Fry, and Luke Lango – sat down with our Editor-in-Chief and fellow Digest writer Luis Hernandez yesterday to discuss the volatility.

What happens from here? What should you do with your investments? Is this a “buy” moment or a “hunker down” moment?

Between the three of them, our experts have about 10 decades of investing experience. That matters in times like this.

Just click here to watch the interview.

As to the ongoing tariff war, and what Trump’s real motivation might be, we’ll keep you updated here in the Digest.

Have a good evening,

Jeff Remsburg