Navigating Trade Tariffs and Inflation | Weekly Business Briefs w/ Martin Perdomo

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Unravel the economic intricacies of President Trump's recent tariffs on steel and aluminum imports with Martin Perdomo, your Elite Strategist, in the latest episode of the Wealthy AF Business Brief. Discover how these tariffs, set at 25% and 10% respectively, might disrupt the construction and automotive industries, while also shaking up international trade relations, particularly with key partners like Canada and the EU. Prepare to unpack the layers of economic consequences, from potential cost surges in crucial sectors to the looming threat of retaliatory measures that echo previous trade skirmishes.

As we continue, we turn our focus to the surging inflation rates in the US, with consumer prices climbing by 3% annually as of January. Listen in as Federal Reserve Chair Jerome Powell warns Congress about the ongoing battle against inflation, leaving investors recalibrating their portfolios in the face of rising US Treasury yields. Explore how these economic tremors impact everything from mortgage rates to entrepreneurial strategies, and why economic growth remains robust despite the challenges. Navigate these turbulent waters with insights and strategies designed to keep you informed and ahead in your investments and entrepreneurial pursuits.

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Episode Transcript

Speaker 1 (00:01):
Welcome back to the Wealthy AF Business Brief, where
we break down the latestbusiness and economic trends
that impact your investments andentrepreneurship journey.
I'm your host, the EliteStrategist Martin Perdomo, and
today we've got three majorstories making headlines, so
let's dive in.
Our first major story this weekis the new tariff announced by

(00:22):
President Trump, which targetssteel and aluminum imports.
The tariff stands at 25% on allsteel imports and 10% on
aluminum imports.
This decision willsignificantly impact the US
economy, particularly industrieslike construction and
automotive, which rely heavilyon these materials.

(00:43):
The US imports 80% of itsaluminum and 70% of its steel
from countries like Canada,mexico, japan, south Korea and
Germany, with these importsvalued at approximately $50
billion in 2024,.
This move could have awide-reaching effect on pricing.

(01:03):
Canada, the US largest supplierof both steel and aluminum, is
expected to feel the brunt ofthese tariffs.
While domestic metals companiestend to gain from reduced
competition, however, it'slikely to raise costs for
industries that rely on importedmetals.
Meanwhile, the EU is all readyto respond with retaliatory

(01:27):
tariffs on iconic Americanbrands such as Harley-Davidson
and Levi's, echoing the tradeskirmish that followed Trump's
last round of tariffs in 2018.
As the previous tariffs, theremay be exemptions negotiated
later, but for now, the tensionrises.
The question remains how willthese tariffs affect the larger

(01:49):
trade landscape and futurenegotiations with global
partners?
Next up inflation rates continueto climb.
The new data reveals that yourconsumer prices in the US surge
by 3% annually in January,marking the fourth straight
month of increases.
This jump was largely driven byspikes in shelter, food and

(02:13):
energy costs.
Federal Reserve Jerome Powelltestified before Congress,
warning that the fight againstinflation is far from over.
Powell indicated that anyfurther rate cuts would be
delayed until inflation trendsback toward the Fed's 2% target.
Traders have now parred backexpectations for rate cuts, with

(02:33):
the Fed projected to holdsteady until at least September
of this year.
So if the Feds keep the rateshigher for longer which has been
pretty long this will continueto have an impact on all asset
classes.
Right, it will continue to haveput pressures on unemployment
and it would continue to putpressure on lending.

(02:55):
It will continue to putpressure on household.
It will continue to putpressure on your credit card
payments.
If you have a home equity lineof credit, this will continue to
put upward pressure.
Right, because none of on yourpayments, because none of these
payments are fixed rate, thatthey follow the federal interest
rate and when the feds go up,your credit card payments go up.

(03:17):
While paul stuck a cautious tone, atlanta fed president rafael
bostic and chicago fed presidentaustin Goldsby echoed that if
inflation persists, moreaggressive measures might be
necessary.
Investors, meanwhile, areadjusting their portfolios, with
US Treasury yields spiking by10 basis points to reach 4.65, a

(03:40):
level not seen in almost threeweeks.
You got to remember that theinterest rates on mortgages, and
credit and mortgagesspecifically, is impacted
directly by the 10-year treasury.
So when the 10-year treasurygoes up, the interest rates go
up on mortgages.
So if you're looking to buy ahouse and that 10-year treasury
is pushing upward, this impactsyour payment.

(04:03):
What your payment will be onthat house.
Rounding out our brief today,hotter than expected inflation
in January since ripples throughthe markets.
Investors who had hoped foreasing interest rates are now
faced with the reality ofsustained price pressures.
The consumer price index rosesharply, fueling concerns that
the Federal Reserve may delayfurther rate cuts or even hike

(04:25):
rates again if inflation doesn'tcool down.
Doesn't cool down.
The benchmark 10-year USTreasury yields jumped to 4.65%
and the S&P 500 saw losses asthe markets digest the inflation
data.
Market sentiment took a furtherhit, as new tariffs on Chinese
goods are expected to exuberateinflation.

(04:46):
Trump imposes an additional 10%tariff on the Chinese imports,
while temporarily suspending a25% tariff on goods from Canada
and Mexico.
According to Erica Art's seniorstrategist at Touchstone
Investments, inflations might besticky at a higher level than
expected, leading to uncertaintyabout when the Fed may actually

(05:09):
cut rates again.
Despite the challenginginflation outlook, economic
growth remains strong, whichcomplicates the overall strategy
.
Investors are adjusting theirpositions, with some favoring
corporate bonds and treasuries.
As you may or may not know, I ama real estate guy, a real
estate investor.
We recently bought a smallapartment building, a six-unit

(05:30):
apartment building, and we arerehabbing building and we are
rehabbing it and we're making itbeautiful.
We're going to then rent it outand then we are in short term
debt in that property and we'regoing to be then going into
long-term debt.
The key here is for investorslike myself this is a real life
example I'm sharing with you isthat the numbers need to make
sense.
So I'm calculating my exitnumber, in other words, my

(05:53):
refinance number, when theproperty is completed, at a
seven and a half, seven andthree quarter interest rate for
a commercial loan fixed for fiveor seven years and amortizing
over 25 years.
Okay, so the numbers still work.
So you have to, as an investor,have to make sure and ensure
that you understand your numbersand that your numbers work for

(06:15):
you, regardless of where themarket is.
One thing's for sure thatmarkets go up, they go down.
The key is you need tounderstand how to buy when the
markets are up and how to buywhen the markets are down.
Wealth true, long, big timegrowth and wealth is made in the
difficult times like they areright now.
During times like this, peoplein my space tend to back out.

(06:38):
They tend to get scared.
I'm going to wait for the ratesto come down.
Well, that's what everyone elseis doing.
That's not what we're doing.
We're continuing to play, we'refinding good deals, we're
buying right and that's how youmake your money.
As we wrap up today's businessbrief, it's clear that trade and
inflation remain dominantthemes in the economic landscape
, with implications foreverything from industrial
production to the everydayconsumer.

(06:59):
We'll continue to monitor this,these issues evolving, and
bring you the latest insightsevery single week.
Until next time, stay informed,stay ahead and peace out.