Wow! Are you as happy as I was to hear the closing bell of the stock market this past Friday?  I am enjoying a 2-day reprieve from stock market losses and pray – truly, truly pray – for a bit of a bounce back on Monday.

Let’s break down the impact of tariffs with a quick economics lesson and talk about what we can do. 

The global economy is complex.  I don’t think any of us can fully know the impact these tariffs will have. For the moment, let’s break this down into a few talking points:

• Tariffs are paid by U.S. corporations when goods come into the country.  Businesses have just two options to deal with the additional cost: 1. They can absorb the tax and are likely to see reduced earnings (bad for investors) or 2. They can pass the tax on to consumers in the form of higher prices (bad for consumers.)
• I suspect the answer lies somewhere in between.  Corporate earnings are the highest they’ve been in 70 years. ⁽¹⁾  The covid pandemic disrupted supply chains and brought high inflation.  Sadly, once the supply chain corrected, prices did not come down – they kept rising.  Corporations had the luxury of paying high dividends and stockpiling cash. ⁽²⁾   I believe this is why our stock markets have been so healthy.
• My brain wants to break this down to the simple economic principle of “supply and demand.” If consumers cannot afford to buy, then demand decreases and corporations will lower prices to keep selling their goods. I’m thinking there is room in the budget to lower profit margins and absorb some of the tariff costs. Consumers will pay the rest.

Only time will give us the ultimate answer.

In the meantime, my concern is for small business owners.  I was watching a local news station where a small retailer ordered his Christmas inventory before tariffs went it effect. He has no choice but to pay the unexpected and significant increase for the cost of the incoming goods. He is not sure if his customers can or will pay the inflated prices. I suspect he does not have a stockpile of cash and he can’t decrease his profit margin the way a major corporation can. 

If large companies can absorb some of the cost increases and small businesses cannot, then what are we left with?

Small business owners have families to feed and employees to pay.  If they and their customers cannot sustain the increases, then the business must close and their employees are laid off.  Unemployment rises and bankruptcies increase.  When we have fewer places to shop, competition decreases and the economic guard rails to curb prices diminish.  

This can’t end well. 

So, what can we do?
 

On January 1^st, I cancelled my Amazon subscription.  I was a bit anxious at first, but I am pleasantly surprised to find that I am happier without it. The immediate gratification of impulse buying has, by default, been eliminated and I am spending less money. (yay!) I actively shop at small, local, family-owned businesses, or with companies that give back, or are Certified B Corps.⁽³⁾

A few weeks ago, I went into a Backyard Bird Store to buy bird seed.  I got an amazing education on birds and feeders and the owner told me his story. As I was walking out he smiled and thanked me for coming in.  I almost cried!  When was the last time I was able to connect with a stranger and experience something as rewarding as that?

I don’t’ know where this tariff experiment will end.  What I do know is that I want a strong, healthy, happy community. I will be making intentional, mindful decisions about how and where I spend my money.  My wish is that you will shop as if you are giving back.  

It’s what we can do.

Please shop mindfully and spend caringly!

Barbara
 
 
April 6, 2025

1. https://www.businessinsider.com/companies-pocket-largest-profits-in-70-years-amid-inflation-complaints-2021-12
2. https://www.forbes.com/sites/christianweller/2024/03/20/high-corporate-profits-go-to-dividends-and-cash-stockpiles/ 
3. A Certified B Crop is a business that is committed to being good for the world, balancing profit with positive impact on people and the planet.

Past performance is no guarantee of future results. Investing involves risk, including possible loss of principal. Investors should consider the investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and, if available, the summary prospectus contain this and other important information about the investment company. You can obtain a prospectus and summary prospectus from your financial representative. Read carefully before investing.