‘Ere Come the Tariff Headwinds

If you’re a big-cap tech company, you have a huge advantage in markets right now. You’re able to license your software, sell your gadgets, and not worry about the impact of tariffs.

For companies that rely on tariffs, it’s a different story. That’s because, as President Trump continues to tinker with tariff rates, most companies have operated as though it’s just a short-term headwind:

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Businesses are largely eating the costs of tariffs, a trend that can’t last forever. (Source: Goldman Sachs)

With businesses eating two-thirds of the costs of tariffs, import-dependent companies are likely to have a weak growth profile as long as tariffs last.

And with trade deals leaving some higher level of tariffs in place compared to a year ago, it’s another reason why the S&P 493 will likely continue to underperform the Magnificent 7 plays.

For the time being, businesses are sacrificing profit margins at the expense of inflation – an unsustainable trend. And another hallmark of the divergence between the tech mania on Wall Street and the real economy.

~ Addison

P.S. Of course, some companies are benefitting from the changing tariff regime, as well as from President Trump’s other economic policies, which are more clearly pro-growth.

That’s why it’s critical to know the best places to invest right now. Our research on President Trump’s MAGAnificent 7 plays is a great place to start.

A special note to Grey Swan subscribers: This week’s Grey Swan Live! will be held on Friday at 11 AM, not Thursday. We’re in the middle of some new groundbreaking research – and will have even more details that afternoon. But our paid-up Fraternity members will get an early sneak peek at what we see developing.

For now, mark your calendar:

Sneak Peek Grey Swan Live!
Friday, August 15, 2025
11am ET

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

If you’re a big-cap tech company, you have a huge advantage in markets right now. You’re able to license your software, sell your gadgets, and not worry about the impact of tariffs.

Turn Your Images On

Businesses are largely eating the costs of tariffs, a trend that can’t last forever. (Source: Goldman Sachs)

With businesses eating two-thirds of the costs of tariffs, import-dependent companies are likely to have a weak growth profile as long as tariffs last.

And with trade deals leaving some higher level of tariffs in place compared to a year ago, it’s another reason why the S&P 493 will likely continue to underperform the Magnificent 7 plays.

~ Addison

P.S. Of course, some companies are benefitting from the changing tariff regime, as well as from President Trump’s other economic policies, which are more clearly pro-growth.

That’s why it’s critical to know the best places to invest right now. Our research on President Trump’s MAGAnificent 7 plays is a great place to start.

For now, mark your calendar:

Sneak Peek Grey Swan Live!
Friday, August 15, 2025
11am ET

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

There’s something about big, round numbers that draws investors like moths to a flame.

In the stock market, every 1,000 points in the Dow or 100 points in the S&P 500 tends to act like a magnet.

Now, after consolidating for five months, gold has broken higher to $4,000.

AI stocks are running hot. They’re not the only game in town… but they’re about half of it.

JPMorgan just reviewed all of the 500 companies in the S&P 500. A full 41 of them are AI-related. While that’s less than 10% of the index by total, it is over 45% of the index by market cap.

Overspending during periods of rising ASPs is self-destructive. For most products, today’s ASP increases result less from natural demand pull and more from supplier-enforced discipline. If memory makers treat them as justification for a capex binge, they will repeat past mistakes and trigger another collapse.

The $50 billion bull case for WFE in 2026 rests on a faulty assumption. Lam and AMAT may benefit from selective investments, but the cycle-defining upturn Morgan Stanley describes is unlikely.

Investors should temper expectations. If history repeats — and memory markets have a way of doing so — the companies that preserve pricing power will outperform, while equipment suppliers may find that the promised order boom never fully materializes.

Europe’s GDP has flatlined over the past 15 years, against a doubling in GDP for the U.S. and even bigger GDP gains in China.

While the U.S. leads the world in AI spending, and China leads in technology like drones, what does Europe lead the world in? Regulation.

They spend more time penalizing U.S. tech firms for regulatory violations than encouraging their own tech ecosystem.