Finding Winners in a Tariff-ying Land

“There’s always a bull market somewhere.” — Robert Kinsman (“Maxims of Wall Street,” p. 107)

Warren Buffett rightly calls tariffs “an act of war.” Canada and China have already responded by imposing tariffs on U.S. exports. Mexico and Europe will be following suit soon.

Economists have known for some time that a tax on imports inevitably causes exports to decline by an equal amount. The best way to reduce or eliminate the trade deficit is to eliminate the federal budget deficit. See this Skousen CAFÉ: How to Eliminate the Trade Deficit Without the Trump Tariffs! – Mark Skousen.

Donald Trump’s idea of “reciprocal” tariffs is even worse. It’s anything but “fair.” It’s a bureaucratic nightmare. According to the Economist, imposing a tariff-for-tariff on each imported good would produce 2.3 million individual tariffs among the 180 trading partners! Talk about insanity.

It’s true that some companies are moving their businesses into the United States in response to the tariffs, but Trump could get the same result simply by cutting the corporate tax rate inside the United States from 21% to 15% (which he already favors).

Are the Tariff Executive Orders Unconstitutional?

Trump’s most recent across-the-board tariffs on Canada, Mexico and China are clearly unconstitutional.

Article I, Section 8, of the Constitution assigns Congress, not the President, the power to impose tariffs, duties and quotas. The only exception is during a wartime emergency.

Is America at war? President Trump signed an executive order based on the “war on drugs.” That may make sense for Mexico, but he can’t justify imposing a 25% tariff on Canadian imports because there is virtually no fentanyl drug crisis on the Canadian border.

According to data from the U.S. Customs and Border Patrol, only about 0.2% of all seizures of fentanyl entering the United States are made at the Canadian border; almost all the rest is confiscated at the U.S. border with Mexico.

In any case, Trump is not likely to back down on his trade war. And that could mean a recession and a bear market on Wall Street.

The last time Trump imposed tariffs on steel and aluminum in 2018, the U.S. steel industry gained 1,000 jobs, but lost 75,000 jobs in other industries due to higher priced steel and aluminum inputs: Trump once again slaps taxes on foreign steel, aluminum, a move that proved costly in his first term | AP News.

The Coming Recession

I have warned for some time that the first year of the four-year presidential cycle is the riskiest, and Trump’s antics could lead to a recession and a bear market on Wall Street in 2025.

Last year, business-to-business (B2B) spending declined, anticipating trouble in 2025.

Indeed, GDPNow at the Atlanta Fed is predicting that real gross domestic product (GDP) will decline 2% in the first quarter, threatening a recession.

Last week, I was in Washington, D.C. and met with the top brass at the Bureau of Economic Analysis (BEA), which publishes GDP and GO (gross output) data.

The first estimate for first-quarter GDP won’t be released until April 30 and GO two months later. They hope to be able to release gross output sooner but are being hampered by the hiring freeze at all government agencies.

They are in full agreement with me that GO is the missing piece of the macroeconomic puzzle and deserves to be highlighted as the “top line” in national income accounting. Hopefully, it will happen soon. For more information on GO, go to www.grossoutput.com.

Where to Hide?

Wall Street is under pressure from the Trump administration’s manufactured trade war. Analysts expect higher prices and a recession due to the tariffs.

But not all sectors are affected alike. So far, we’ve seen a selloff in technology, finance and bonds… Bitcoin, which used to be considered a safe haven, is moving in the same direction as stocks — up or down, depending on the market.

But some sectors are bucking the trend. They include:

— Gold and silver: Gold in particular does well when crisis and uncertainty hit Wall Street. It’s over $2,900 an ounce again. As Julian M. Snyder states, “The impact of the rate of inflation on the price of gold is like tracking the footprints of an animal.” (Maxims, p. 152; to order at a discount, go to www.skousenbooks.com)

— Pipeline companies: Oil prices are falling, while natural gas prices are rising. Pipeline companies are midstream energy firms that make money on set fees based on the volume of oil and gas that go through the pipelines.

— Biotech and drug stocks: Most biotech stocks, such as Eli Lilly, Amgen, AstraZeneca and Novartis, have done well in 2025. The sale of new and old drugs is booming.

I recommend these stocks in my investment newsletter, Forecasts & Strategies, and my trading services. See www.markskousen.com for more details.

My Meeting with Vivek Ramaswamy in Washington, D.C.

Last week, I met up with Vivek Ramaswamy, the former presidential candidate who is now running for governor of Ohio.

He noticed my Benjamin Franklin pin (and bifocal glasses) and was delighted when I told him Franklin is my ancestor. He posted our fun exchange the next day and it quickly went viral, with over 3.3 million views so far! Watch it here.

During our meeting, I gave Vivek two quotes from Ben Franklin. He asked me to repeat them so he could memorize them:

“A virtuous and industrious people may be cheaply governed.”

“The system of America is commerce with all and war with none.”

Of course, Ben Franklin supported free trade. He famously said, “No nation was ever ruined by trade.”

“Ben Franklin” spoke at FreedomFest South Dakota: “Healthy, Wealthy and Wise” in 2021, while Vivek spoke at FreedomFest Memphis: “The Soul of Liberty” in 2023.

Vivek hopes to make it to FreedomFest Palm Springs: “Oasis of Liberty” in 2025.

What do you think? Should Vivek come back to FreedomFest June 11-14? Let him know by reaching out to him on X!

Hope to see you, as well, in Palm Springs. It’s going to be most memorable, with Steve Forbes, Art Laffer, Marc Eliot, Kennedy (Fox News) and financial gurus Jim Woods, Dave Phillips, Mike Turner, Alex Green and Rick Maybury (his first public appearance in 15 years). Over 200 speakers in all!

Early bird discount ends on March 31. Details at www.freedomfest.com. Or call Hayley at 1-855-850-3733, ext. 201. You’ll be glad you did.

Good investing, AEIOU,

Mark Skousen

You Nailed it!

My Life and Gene Hackman, R.I. P.

by Mark Skousen

Gene Hackman, the veteran actor (who appeared in more than 70 films and won two Academy Awards), lived a full life, dying at age 95. I especially liked his films “The French Connection,” “Mississippi Burning” and my favorite, “The Poseidon Adventure,” where he plays the role of a preacher that is Christ-like (sacrificing his life for others).

For most of my adult life, friends and strangers have often told me that we look alike, even though we are a generation apart. I actually was followed around the L.A. airport for an hour by a fan who was sure that I was Gene Hackman. He refused to accept my denial. At the dry cleaner’s, the clerk was convinced that I was Hackman. On a flight from Miami to the Bahamas I actually met Hackman, but I didn’t wish to interrupt his privacy, so we didn’t talk. If we had, I would have talked about the religious insights in “The Poseidon Adventure.”

Gene Hackman was honored at the Academy Awards this past week.

Speaking of the Academy Awards, I was sorry to hear that the popular film “Reagan,” produced by Mark Joseph, was not allowed to compete because it failed the DEI test that Hollywood imposes. Never mind historical accuracy! Mark Joseph is going to speak at this year’s FreedomFest and Anthem Film Festival, and I look forward to his comments, and how he was able to complete the “Reagan” film after five long years.