With the looming threat of a trade war between the United States and a number of countries (China, European Union members, etc.), the Stansberry Digest, the daily newsletter for subscribers to investment research and publishing firm (Stansberry Research), published an article by lead editor Justin Brill, detailing the potential effects of a trade war on the American economy.
Stansberry Research, founded in 1999 by Frank Porter Stansberry, is as a noted investment research firm that provides information to its subscribers regarding secure and successful investing (https://gazetteday.com/2018/03/stansberry-research-insurance-investments/). Headquartered in Maryland, with operations out of three additional states and subscribers in over a hundred countries, Stansberry utilizes a collection of financial analysts with diverse views on investing to deliver varied opinions and investment advice through the firm’s newsletters.
In light of President Donald Trump’s announcement of 25% steel and 10% aluminum import tariffs that he said would apply to all U.S. trading partners without exception, investors have been bracing for what would the economic repercussions if the tariffs did go into effect. Brill explained both why he believed the administration’s plan would not work, and the ways in which it could harm instead of benefit the economy.
For one, the steel and aluminum markets in the U.S., according to Brill, are unlikely to rebound from their wartime employment highs in the 1940s and 1950s, regardless of tariff imposition. Having outsourced more than four-fifths of jobs overseas since the late 50s, while seeing a drop in productivity of less than half in the same time frame, Brill posits that the American steel market has very little incentive to bring back outsourced jobs.
Perhaps more critically, however, Brill points out that imposition of tariffs would trigger retaliation from those affected like China, leading to higher prices for consumer items across the board, from jeans and motorbikes, to corn and orange juice.
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