‘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.)

The very moment The State enters the economy in any way, shape or form – to tax one group and subsidize another… to set the price of a single good or service… to impose itself on a single contract… to claim a monopoly on the production of money, to demand its fiat be used, and that others be prohibited… to require a license, permit or other permission… to put its flabby finger on a single scale… – is to simultaneously render property contingent and the market subject to force.

American household “wealth” — stocks, bonds, real estate, savings — has inflated by $60 trillion in just five years. A full $100 trillion since the 2009 crisis lows.

If you’re a glass-half-full guy, that’s the magic of staying invested through cycles.

If you’re glass-half-empty guy, you see the risk and ask: how much of the current $60 trillion could vanish just as fast in the next down cycle?

Year-to-date, over $80 billion has flowed out of small-cap U.S. stock funds. These are the companies that can include the proverbial next Nvidia or next Microsoft.

Many of these companies trade at far more reasonable valuations than Microsoft and Nvidia today. And their growth rates can be just as impressive. It’s easier for a small-cap company to double earnings than a company that’s already earning tens of billions per year.

It’s likely that investors won’t rediscover these stocks until the big-cap names falter. But for all our criticism of investor enthusiasm and high-flying valuations in the overall market today, small cap stocks are starting to look like a relative value, especially for more patient investors.

Stephen Miran’s appointment to the Federal Reserve isn’t just another personnel move—it’s the placement of Trump’s Reset architect inside the very institution that will help carry out America’s most ambitious economic overhaul in generations.

Without getting into the weeds, Miran, the mastermind behind what’s been dubbed the “Mar-a-Lago Accord,” outlined a comprehensive plan to flip the U.S. dollar’s reserve status from a burden into a bargaining chip. To turn America’s towering debt from an embarrassment into leverage. And to reorient the entire global economic structure in Washington’s favor.

American household “wealth” — stocks, bonds, real estate, savings — has inflated by $60 trillion in just five years. A full $100 trillion since the 2009 crisis lows.

If you’re a glass-half-full guy, that’s the magic of staying invested through cycles.

If you’re glass-half-empty guy, you see the risk and ask: how much of the current $60 trillion could vanish just as fast in the next down cycle?

Year-to-date, over $80 billion has flowed out of small-cap U.S. stock funds. These are the companies that can include the proverbial next Nvidia or next Microsoft.