you can't really watch the stock market there'll be a little disturbance we're okay with that lots of people selling off on the market you can see it right there on your screen let the dealmaker make his deals this is just the beginning what's up Graham it's Guys here and all hell is officially broken loose for those unaware we have just witnessed the largest single day stock market point drop ever in history all because of a term that sends chills down every investor's spine reciprocal tariffs that's right without exaggeration tariffs are now the highest they have ever been since the early 1800s and beginning today they are single-handedly changing the entire landscape of our economy from the value of the US dollar potential trade wars and a worldwide fallout in fact the situation has gotten so bad that some headlines are drawing eerily similar comparisons to that of the 1929 Great Depression so with nearly everything significantly falling with the exception of Warren Buffett's cash pile let's discuss exactly what's happening what this means for you the impact this is about to have on pretty much everything and then finally how you could use this information to profit because I'm not going to lie this might wind up being a very difficult next few months and the more you could understand exactly what to expect and how to prepare the better but before we start as usual if you appreciate the last minute breaking news videos like this it would mean the world to me if you slapped a tariff on the like button and subscribed if you haven't done that already i know it's annoying and I get tired of asking for it but it does objectively help out the channel tremendously and as a thank you for doing that I'll do my best to read or reply to as many comments as I can so thanks so much and also big thank you to Surf SharkVPN for sponsoring this video but more on that later all right so I've said this before but I'm going to say it again because it's important in order to understand the impact this is about to have on our entire economy we need to answer the question what is a tariff even though there's plenty of technical definitions out there just think of this like an additional tax that's collected anytime you import goods from one country to another the theory is that if imported goods become more expensive it'll encourage people to buy and manufacture locally and if they don't do that then at least the government gets to collect a little more revenue in the process and if that sounds confusing here's an example let's just say that China makes and imports a vehicle into the United States for $25,000 well this competes with Americanmade cars that cost $50,000 to make so as a result Americanmade products are seen as more expensive and less desirable and demand for Chinese cars increases however in an effort to level the playing field a 100% tariff is placed on cars from China and all of a sudden both items now cost the exact same when sold in the US thereby increasing revenues for the government driving more demand for locallymade goods and making American products slightly more appealing now in terms of who pays this tariff despite what you might think it's not paid for it by the other country but instead by the person or the company who imports that item to the United States so if Ford brings in parts from out of the country while making their F-150 Ford is the company responsible for paying the additional tax and not the country who makes the item and this could result in nearly every single item that you use on an everyday basis going up significantly in price like without exaggeration you could apply this towards any import like clothing batteries housing materials cars and electronics and all of a sudden this additional cost has to come from somewhere so why is this likely to result in a trade war well like I said the thought process is that tariffs can be beneficial in four main ways first they protect US companies from foreign competition in this case if imported goods become more expensive then local companies have a chance to compete with their own products this leads to number two increased job growth when local companies are able to compete they're likely to hire more workers and sustain a higher employment rate that leads to number three higher government revenue the more jobs hired locally the more revenue the government can collect in taxes and even if more jobs aren't created the government is still collecting additional revenue coming in from the tariffs which could then result in number four favorable trade negotiations perhaps other countries don't want tariffs on their products because that's going to hurt their own economy so they negotiate to buy more Americanmade products resulting in a fair global trade around the entire world although in terms of how we came up with these tariffs here's where things get interesting for the last 50 years the United States has been in what's called a trade deficit where we buy more from other countries than they buy from us why well frankly other countries are able to make goods and services for a lot cheaper than we can manufacture here and this could result in the detriment of our own workforce in the United States who can't keep up as well as the value of the US dollar which constantly gets spent overseas so in a way tariffs were put in place on Liberation Day to level the playing field now in terms of how these tariffs were calculated it's a bit confusing and there doesn't seem to be a direct science to this but it does seem to be pegged to the amount that other countries impose on the United States however there is a very big risk to the strategy because as we're starting to see other countries are beginning to fight back with reciprocal tariffs in this case China went on record to urge the United States to immediately lift tariffs otherwise they vow retaliation canada said that if we tariff them they're going to tariff us which is going to result in us tariffing them even more and them tariffing us even more europe is preparing for counter measures to take place and we're basically finding ourselves in a very volatile scary game of chicken to see which company blinks first and who gives in to the United States demands after all realistically tariffs just result in number one higher prices for everyone especially because most of the companies just pass on the additional cost to the consumer without any guarantee of benefiting the United States second a trade war becomes more and more likely resulting in a stalemate that just hurts everybody and that leads to three less economic growth as people cut back and buy less which is what we're starting to see as it stands now economic uncertainty just spiked to levels never seen before on the index us companies cut 275,000 jobs in March marking the highest number of layoffs since May of 2020 and April 3rd was the worst day in the stock market since June of 2020 this is partially why Trump said that he's open to trade negotiations and is urging other countries to lower their tariffs on US before hits the fan although in terms of what this means for the future you're going to want to hear this although before we go into that I'm going to be honest it's truly astonishing the lengths people go through to protect their investments i'm talking about setting up LLC's creating complex passwords to protect their accounts or getting home or auto insurance for peace of mind yet most people fail to invest any time whatsoever into safeguarding something that's arguably more impactful and more likely to be compromised their data in fact one of the easiest ways that you could protect yourself is by using a VPN like our sponsor Surf Shark for those unaware Surf SharkVPN works by encrypting your online data to help secure your personal information mask your IP address and help prevent hackers from identifying your city country and download history or 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risk-free to see what you think again the link is down below in the description with the code Graham to get an extra four months for free enjoy thank you so much now let's get back to the video all right so in terms of where we stand let's talk about tariffs gone wrong see here's the thing tariffs aren't this new concept they've been around for hundreds of years they are used on a regular basis and in specific situations they make very little difference to the economy whatsoever but when implemented on a broad scale as history shows us things could get very bad very quickly and when it comes to this let's take a look at the early 1800s because believe it or not they had similar tariffs as we have today back then tariffs were implemented to protect US industrial products against competition from foreign imports and tariffs were increased all the way to 49% in this case US manufacturing certainly benefited but the agriculture industry did not over time this resulted in the reduction of tariffs when individual states argued that they were unconstitutional and all of this laid the groundwork for the Civil War after that we had another round of tariffs in 1930 known as the Smoot Holly Tariff Act at this point the United States was in a very tough position of being in the middle of the Great Depression with unemployment being very high and businesses were struggling so as a way to help boost the economy tariffs were placed on foreign goods to make American businesses stronger and prevent foreign competition from ruining the lives of everyday Americans but instead the opposite happened instead of American products booming other countries got upset and raised their taxes on US products that caused a lot of local companies to sell less they scaled back and many of them went under on top of that world trade diminished because many other countries refused to do business with anyone outside of their own border making the global economy a lot worse off this meant that people wound up paying significantly more for the exact same items than they did before and a 100 years later the Smoot Holly Act was actually credited as making the Great Depression worse yet here we are in 2025 implementing tariffs once again higher than we saw during the Great Depression and at levels we've not last seen since 1828 although here's where things get a bit uh confusing according to the Market Sentiment Blog who I'm a big fan of by the way and I'll link to down below in the description some of the tariffs implemented don't make any strategic sense and they gave the example of Taiwan in 2024 the US imported 116 billion worth of goods and exported 42.3 billion creating on paper a rather significant trade deficit but once you begin to zoom out you'll realize that the United States gave Taiwan $1.5 billion between 1951 and 1965 to build out their economy we helped them become a leading manufacturer of semiconductor chips that US companies take advantage of so it's not out of the ordinary that we buy more from them than they buy from us especially when they have onetenth the population and 1/3 of the wealth or here's another example malaysia their main export is palm oil something that we don't even produce and they have no competition whatsoever with the United States yet here we are with a tariff against them so historically why haven't tariffs worked look I really want to give full credit to the market sentiment blog for this example because they really said it best think of it like this mexico makes a hammer for $2 and sells it in the US for $4 if you made the same hammer in the US it'll cost $6 so no hammers are made in response to that the US puts a 300% tariff on hammers so Mexican hammers now cost $8 this allows the United States to compete and sell its own hammer for $8 thereby making a profit but now the US consumer pays $8 for a hammer instead of four now sure people could certainly argue that in that case United States companies are now able to make a $2 profit and hire domestic labor that otherwise wouldn't have existed but the extra cost has to come from somewhere and usually that's at the expense of everyday items costing more and the market falling to compensate to make matters worse so far the money collected from tariffs has only helped offset a very very small amount of our national debt for example in 2022 they generated $80 billion for the US government which was just 2% of all US revenue enough to keep the government going for just 15 days that's it it's also said that personal income taxes in the US raised more than 27 times as much revenue as tariffs in 2021 this pretty much suggests that it'll be impossible to run the US government on tariffs alone in fact it said that a tariff hike of 69.9% in the level of imports for 2023 seems like it could fully replace individual income tax revenues but that's not considering any of the fallout of mass layoffs reduced spending and less investment which feasibly makes it a losing proposition no matter how you look at it suffered from that we also just have to acknowledge that other countries sometimes just have the ability to produce items better and more efficiently than we can in the United States it's why Mexico exports avocados thanks to their soil and climate than let's say Finland where it's too cold the same applies to coffee beans there's a reason why the majority of coffee is produced throughout the equator versus Antarctica it's for these reasons that for a variety of exports it makes sense to create what you have an abundance for and unfortunately a trade war really discourages that that's why I think tariffs can be useful in limited niche situations for protecting certain US products and services but on a broad scale everything historically suggests that they're a bad idea they wind up raising prices and having a negative impact on all income groups and it's best to just allow the market to do its thing after all most likely this is going to have the biggest impact on the lowest income bracket costing them 5.5% of their disposable income however even with all of that said there is something to be argued about using tariffs as a negotiation tactic for more favorable trade deals around the entire world knowing that other countries have more to lose than we do sure I see many people comparing this to bullying smaller countries who don't have the size or wealth to compete with us but I would like to think that this is all part of a plan to negotiate more favorable terms and as long as this doesn't go on for too long then it might be effective but then again if the rest of the world bands together and refuses to back down this could get very ugly very quickly this is why the S&P 500 dropped almost 5% in a single day it's why people were panicking at the thought that an entire year's investments growth are gone in a matter of 8 hours and in terms of my thoughts on this and what you could do about it here's what I think when it comes to tariffs it's largely outside of your control there's not much you could do about it and there's no sense wasting mental energy thinking about what might or might not happen instead you get a much higher ROI simply by living below your means making sure you keep a consistent income and having a long-term approach to investing from an investment standpoint the stock market's best days often happen in a bare market when prices are down the most and this usually happens after the worst days this is why I'm not trying to time the markets but instead I'm using it as an opportunity to buy in a little bit cheaper because as long as I'm not planning to sell anything that I have for another 10 or 20 years anything that happens in between now and then really makes no difference whatsoever honestly as much as it sucks to be down a ton of money it's just part for the course like this is normal investing when you look back over the last few decades this happens on a consistent basis and that's why for me I'm not really panicking yes I know all of this is boringly simple but study after study shows that if you miss the best 10 days in the market your return drops substantially this is the single reason why the average person is such a horrible investor underperforming just about everything like even a dead person has much higher returns because they don't get emotional about their investments since uh they're dead anyway that's what I'm doing i bought more yesterday I bought more today and I'll continue no matter what smashing the like button and subscribing if you haven't done that already and if there's anything I missed by the way or anything you want to add comment down below and I will do my best to read and reply to as many comments as I can oh and lastly some colleagues of mine are working on a free budgeting software that's meant to replace the likes of mint.com so if that sounds interesting to you and you want to be a beta user of it I'll link to it down below in the description so that when it launches you can be one of the first people to try it out and share your feedback so that's it thank you so much and until next