April 3, 2025 • 9 mins
In this special midweek episode of Paramount Wealth Perspectives, host Chris Coyle and Chief Investment Officer Scott Tremlett discuss the unexpected and historic tariff increases announced this week, analyzing their economic impact and potential retaliations from global markets.
Scott explains how the tariffs—pegged to bilateral trade deficits—could drive inflation higher, potentially pushing CPI to 4.5% in 2025 before gradually declining. They also explore the implications for the U.S. labor market, including immigration slowdowns, rising jobless claims, and the possibility of negative GDP growth in the second quarter.
Scott offers insights on how these economic shifts may influence the Federal Reserve’s decisions, including potential rate cuts later this year, and the possibility of fiscal stimulus if the economy continues to slow. Finally, they discuss critical portfolio management strategies, emphasizing the importance of diversification, international investments, and avoiding over-concentration in U.S. stocks.
Whether you’re a seasoned investor or trying to stay informed, this episode provides valuable guidance for navigating a rapidly evolving economic landscape.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris Coyle (00:00):
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
(00:20):
This is your host, Chris Coyle.
I am the marketing director andfinancial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, the Chief Investment
Officer here at ParamountAssociates Wealth Management.
Today we are doing a little bitof a special episode.
It's a midweek episode inresponse to the announcements
(00:40):
yesterday.
So today I've prepared somequestions to ask Scott, and I'm
interested to see how he's goingto answer them.
First question I wanted to askyou, Scott, is what were the
expectations around the tariffannouncements and how in reality
did they differ?
Game on.
Well, thanks Chris.
I appreciate you putting thistogether.
(01:01):
I've been in conferences sincefive 30 Mountain Time this
morning, so I wanted to makesure we get this out timely and
share the information that Ihave gone over here.
I mean, guess going into thisannouncement, really the
baseline for tariffs on US Goodsglobally was 2%.
And most analysts, including me,expected a moderate increase in
(01:23):
global tariffs of about 10% ontop of the two, so that'd be
about 12%.
The actual calculation hasreally surprised.
Markets and tariffs were reallypegged to bilateral trade
deficits.
For example, Europe's averagetariff on US goods is estimated
about 2.7%, but the US tradedeficit with Europe.
(01:44):
Was used as justification tomassively raise rates over 30%,
creating the highest tariffssince 1904.
This is like one companydeciding to penalize its
supplier because they spent morewith them than they sold.
Like this, let's say twocompanies do business with each
other and Business two sends 75%more business to business.
(02:06):
One, to make it even businessTwo charges a 75% tariff on
business one.
The next time business one makesa purchase.
To me, this is flawed in a veryaggressive strategy.
We will see on retaliations, butmajor retaliations would hurt
foreign countries more than theus.
Let's say, for example, that acountry decides not to buy
(02:29):
treasuries or dollars, and thenthe dollar loses value.
Well, that really hurts foreignexporters.
I do expect retaliations tocome, but we'll see on the speed
and the scale.
Yeah, Scott, I'm definitelyinterested to see about
potential retaliations.
I'm sure that they will come, asyou mentioned, but we will see
on the scale.
And I have to say personally, I,I thought that the tariffs
(02:51):
surprised me.
I was expecting them to be a bitlower, and I think we saw that
in the markets today.
Absolutely.
The next question I wanted toask was, how do these tariffs
intersect with the US labormarket and immigration trends?
Let's start with the good news.
The good news is that the USeconomy as a whole is still in a
good place.
(03:12):
Wages are growing and the jobmarket is still pretty tight.
I know there are 300,000government workers who have lost
their jobs, but the US alsocreates 150,000 jobs a month.
So in theory, that's just twomonths of hiring, and there is
still on paper more than oneopen job for each unemployed
worker.
(03:33):
But this is an issue of timing.
The economy was already slowingdown.
A deeper concern lies in theimmigration slowdown.
If net immigration drops to say500,000 a year and 250,000
workers are deported, the USlabor force will only grow by
250,000 workers a year.
This compares to 1 millionworkers a year that we are
(03:56):
previously adding.
Combining that with retiringbaby boomers, this could create
a labor shortage that pressureswages, and does stifle growth.
We're also seeing early signs ofweakness in the job market.
As of today, continuing joblessclaims are rising, suggesting
hiring may be cooling.
I thought going into this, thatthe first quarter, GDP would be
(04:18):
slightly positive.
From here.
We could see a negative GDP inthe second quarter.
I would definitely be interestedto monitor how the GDP report
will unfold.
I know right now they havepenciling in a 0.3% projection
in the first quarter of thisyear, which would definitely be
a slowdown from the 2.4% that wesaw in 2024.
(04:41):
Next question, Scott, I wantedto hit on is how might these
tariffs and economic shiftsaffect inflation?
The Fed's next moves, andfinally, fiscal stimulus in the
United States.
Sounds good.
Uh, let's start with inflation.
Before yesterday, I had reallyconsidered CPI or consumer
inflation increasing to about.
Three, 3.5% in 2025 afteryesterday, the one time
(05:06):
inflation spiked it fromtariffs.
We could see CPI pushing forwardto 4.5%.
Either way, I do feel likeinflation will slowly fall.
To 2.5% by the end of 2026 asbase effects and global
adjustments do work through thesystem.
Let's move to the Fed.
The Fed was definitely uncertainbefore I had actually questioned
(05:29):
whether we would see any cutsthis year, and now the markets
are pricing in three rate cutsthis year with the first
possibly in June, particularlyif unemployment claims increased
dramatically.
Lastly, fiscal stimulus in theus.
Any further slowdown, let's saya quarter two negative GDP print
(05:50):
may accelerate fiscal stimulusor tax cuts.
The greater the slowdown, thegreater the tax cuts, and there
are potential doge dividends toAmericans.
The Doge dividend would help usbounce off of any weakness but
do remember the inflation risksthat were created last time when
we did stimulus and had supplychain problems.
(06:12):
Yeah, I'm sure everyoneremembers those pesky supply
chain problems and trying to geta car after Covid or anything
like that.
Um, and I'd, I'd agree with you,Scott, in that certainly if the
unemployment rate rises, thatwill increase the likelihood of
the ever data dependent FederalReserve on any decision that
they may make.
(06:33):
Next question and final questionI wanted to ask Scott, is what
does this mean for investors andportfolios right now?
Well, let's start with again.
Good news is that the US economyas a whole is still in a good
place.
My greatest risk, however, goinginto 2025, was a simple fact
that everyone is invested in thesame stocks.
(06:54):
And when that happens, you cansee dramatic swings in times of
uncertainty.
Right now, portfolio response.
It's time to stay structured.
I do feel like this is a yearpotentially of repricing of US
assets and tariffs as they standnow on paper.
All of this is more impactful tothe US than foreign countries,
(07:16):
and we may have more room to goon the negative as US equities
still trade at 20 times earningsdown from 22 times to start the
year.
Sure, but still above historical16 times average earnings growth
expectations have dropped from12% to 8% already.
But let's not forget aboutinternational markets.
(07:36):
International markets areoutperforming.
They outperform today and in thefuture.
International investments can behelped by offsetting fiscal
stimulus to boost domesticdemand, and a focus on trading
with each other and maybe notthe us.
There's also an opportunity forforeign markets to attract
investors looking to reduce USstock investments.
(07:58):
It does seem like the strongdollar narrative may be breaking
and dollar weakness today isdefinitely in response to lower
US growth expectations, longerterm trend, uh, it's still to be
determined.
Diversification really forportfolio structures is the key.
Avoid over concentration in megacap US names.
(08:19):
Make sure you includeinternational.
Make sure you includealternatives.
Make sure you includenon-correlated assets and be
cautious when everyone owns thesame stocks.
Volatility does spike positionfor eventual upside.
But with a risk managed balance.
Now, believe me, we will haveroaring markets again, but in
(08:42):
the interim, balance inportfolios will be key.
I totally agree with you, Scott.
I think during times ofuncertainty, diversification is
key and you pointed out somegreat ways to diversify, whether
that is international markets oralternative or non-correlated
assets.
So I really appreciate youtaking the time here, Scott, to
share your insights.
(09:03):
I want to take the time to thankall of our listeners for tuning
in But for now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
Intro song
Hello everyone.
Welcome to Paramount WealthPerspectives, your go-to podcast
for the latest updates on globalmarkets and current economic
events.
(00:20):
This is your host, Chris Coyle.
I am the marketing director andfinancial advisor here at
Paramount Associates WealthManagement.
And today I'm joined by ScottTremlett, the Chief Investment
Officer here at ParamountAssociates Wealth Management.
Today we are doing a little bitof a special episode.
It's a midweek episode inresponse to the announcements
(00:40):
yesterday.
So today I've prepared somequestions to ask Scott, and I'm
interested to see how he's goingto answer them.
First question I wanted to askyou, Scott, is what were the
expectations around the tariffannouncements and how in reality
did they differ?
Game on.
Well, thanks Chris.
I appreciate you putting thistogether.
(01:01):
I've been in conferences sincefive 30 Mountain Time this
morning, so I wanted to makesure we get this out timely and
share the information that Ihave gone over here.
I mean, guess going into thisannouncement, really the
baseline for tariffs on US Goodsglobally was 2%.
And most analysts, including me,expected a moderate increase in
(01:23):
global tariffs of about 10% ontop of the two, so that'd be
about 12%.
The actual calculation hasreally surprised.
Markets and tariffs were reallypegged to bilateral trade
deficits.
For example, Europe's averagetariff on US goods is estimated
about 2.7%, but the US tradedeficit with Europe.
(01:44):
Was used as justification tomassively raise rates over 30%,
creating the highest tariffssince 1904.
This is like one companydeciding to penalize its
supplier because they spent morewith them than they sold.
Like this, let's say twocompanies do business with each
other and Business two sends 75%more business to business.
(02:06):
One, to make it even businessTwo charges a 75% tariff on
business one.
The next time business one makesa purchase.
To me, this is flawed in a veryaggressive strategy.
We will see on retaliations, butmajor retaliations would hurt
foreign countries more than theus.
Let's say, for example, that acountry decides not to buy
(02:29):
treasuries or dollars, and thenthe dollar loses value.
Well, that really hurts foreignexporters.
I do expect retaliations tocome, but we'll see on the speed
and the scale.
Yeah, Scott, I'm definitelyinterested to see about
potential retaliations.
I'm sure that they will come, asyou mentioned, but we will see
on the scale.
And I have to say personally, I,I thought that the tariffs
(02:51):
surprised me.
I was expecting them to be a bitlower, and I think we saw that
in the markets today.
Absolutely.
The next question I wanted toask was, how do these tariffs
intersect with the US labormarket and immigration trends?
Let's start with the good news.
The good news is that the USeconomy as a whole is still in a
good place.
(03:12):
Wages are growing and the jobmarket is still pretty tight.
I know there are 300,000government workers who have lost
their jobs, but the US alsocreates 150,000 jobs a month.
So in theory, that's just twomonths of hiring, and there is
still on paper more than oneopen job for each unemployed
worker.
(03:33):
But this is an issue of timing.
The economy was already slowingdown.
A deeper concern lies in theimmigration slowdown.
If net immigration drops to say500,000 a year and 250,000
workers are deported, the USlabor force will only grow by
250,000 workers a year.
This compares to 1 millionworkers a year that we are
(03:56):
previously adding.
Combining that with retiringbaby boomers, this could create
a labor shortage that pressureswages, and does stifle growth.
We're also seeing early signs ofweakness in the job market.
As of today, continuing joblessclaims are rising, suggesting
hiring may be cooling.
I thought going into this, thatthe first quarter, GDP would be
(04:18):
slightly positive.
From here.
We could see a negative GDP inthe second quarter.
I would definitely be interestedto monitor how the GDP report
will unfold.
I know right now they havepenciling in a 0.3% projection
in the first quarter of thisyear, which would definitely be
a slowdown from the 2.4% that wesaw in 2024.
(04:41):
Next question, Scott, I wantedto hit on is how might these
tariffs and economic shiftsaffect inflation?
The Fed's next moves, andfinally, fiscal stimulus in the
United States.
Sounds good.
Uh, let's start with inflation.
Before yesterday, I had reallyconsidered CPI or consumer
inflation increasing to about.
Three, 3.5% in 2025 afteryesterday, the one time
(05:06):
inflation spiked it fromtariffs.
We could see CPI pushing forwardto 4.5%.
Either way, I do feel likeinflation will slowly fall.
To 2.5% by the end of 2026 asbase effects and global
adjustments do work through thesystem.
Let's move to the Fed.
The Fed was definitely uncertainbefore I had actually questioned
(05:29):
whether we would see any cutsthis year, and now the markets
are pricing in three rate cutsthis year with the first
possibly in June, particularlyif unemployment claims increased
dramatically.
Lastly, fiscal stimulus in theus.
Any further slowdown, let's saya quarter two negative GDP print
(05:50):
may accelerate fiscal stimulusor tax cuts.
The greater the slowdown, thegreater the tax cuts, and there
are potential doge dividends toAmericans.
The Doge dividend would help usbounce off of any weakness but
do remember the inflation risksthat were created last time when
we did stimulus and had supplychain problems.
(06:12):
Yeah, I'm sure everyoneremembers those pesky supply
chain problems and trying to geta car after Covid or anything
like that.
Um, and I'd, I'd agree with you,Scott, in that certainly if the
unemployment rate rises, thatwill increase the likelihood of
the ever data dependent FederalReserve on any decision that
they may make.
(06:33):
Next question and final questionI wanted to ask Scott, is what
does this mean for investors andportfolios right now?
Well, let's start with again.
Good news is that the US economyas a whole is still in a good
place.
My greatest risk, however, goinginto 2025, was a simple fact
that everyone is invested in thesame stocks.
(06:54):
And when that happens, you cansee dramatic swings in times of
uncertainty.
Right now, portfolio response.
It's time to stay structured.
I do feel like this is a yearpotentially of repricing of US
assets and tariffs as they standnow on paper.
All of this is more impactful tothe US than foreign countries,
(07:16):
and we may have more room to goon the negative as US equities
still trade at 20 times earningsdown from 22 times to start the
year.
Sure, but still above historical16 times average earnings growth
expectations have dropped from12% to 8% already.
But let's not forget aboutinternational markets.
(07:36):
International markets areoutperforming.
They outperform today and in thefuture.
International investments can behelped by offsetting fiscal
stimulus to boost domesticdemand, and a focus on trading
with each other and maybe notthe us.
There's also an opportunity forforeign markets to attract
investors looking to reduce USstock investments.
(07:58):
It does seem like the strongdollar narrative may be breaking
and dollar weakness today isdefinitely in response to lower
US growth expectations, longerterm trend, uh, it's still to be
determined.
Diversification really forportfolio structures is the key.
Avoid over concentration in megacap US names.
(08:19):
Make sure you includeinternational.
Make sure you includealternatives.
Make sure you includenon-correlated assets and be
cautious when everyone owns thesame stocks.
Volatility does spike positionfor eventual upside.
But with a risk managed balance.
Now, believe me, we will haveroaring markets again, but in
(08:42):
the interim, balance inportfolios will be key.
I totally agree with you, Scott.
I think during times ofuncertainty, diversification is
key and you pointed out somegreat ways to diversify, whether
that is international markets oralternative or non-correlated
assets.
So I really appreciate youtaking the time here, Scott, to
share your insights.
(09:03):
I want to take the time to thankall of our listeners for tuning
in But for now, stay informed.
Stay ahead and join us next timefor more key updates shaping the
global economy.
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