Protectionist tariffs raise prices, reduce imports, and “starve the economy”, as demonstrated by historical events like the American Civil War and World Wars I and II where blockades were used to cripple enemy economies.
Tariffs are taxes collected by force, often imposed on inputs (capital goods) used to produce other products, making it harder for American companies to compete, as seen in the late 19th century when high tariffs hindered the Industrial Revolution.
Despite being against one’s self-interest, propagandists have successfully convinced millions that protectionist tariffs are beneficial by appealing to xenophobia and fear of foreign invasion.
Trump’s tariffs are politically popular but economically harmful, potentially leading to retaliation from trading partners and shrinking international trade by up to 80%, as occurred in the 1930s with the Smoot-Holly Tariff.
Trump’s tariffs are unconstitutional, as the Constitution gives Congress control of tariffs, but Trump has used executive orders to impose them, contributing to a broader authoritarian trend in US politics.
Tariffs are anti-farmer, harming US agriculture by disproportionately affecting exports to impoverished countries that can’t afford American goods, a fact recognized by farmers even in the 19th century.
88% of the world’s population in emerging economies opposes Western arrogance and neocolonialism, challenging the dominance of the US dollar.
The global economy is not booming, with ordinary people struggling against rising prices and housing affordability issues, despite record-high stock markets.
Faber views the EU as a “complete failure”, with most countries having lower incomes and wealth per capita than the poorest US states.
Faber is bullish on emerging markets like Georgia, Kazakhstan, Uzbekistan, China, Argentina, and Hong Kong real estate, citing their low valuations compared to historically outperforming US markets.
Platinum is extremely cheap relative to gold and silver, vulnerable to a potential squeeze by South Africa and Russia due to historical tensions with the US.
Tobacco and alcohol stocks like Philip Morris, Altria, and British American Tobacco have performed well, paying high dividends as young people drink less than previous generations.
Felix Zulauf predicts a “wild ride” in 2025, with stocks peaking in Q1, falling 15-20%, recovering to new highs, and ending the year with a serious drawdown, marking the beginning of his forecasted “decade of the roller coaster”.
The 2025 downturn could be triggered by a combination of factors including tariffs, budget cuts, and a corporate debt refinancing wall, potentially acting as a liquidity sponge and causing market volatility.
Zulauf warns that if the US introduces tariffs, China and Europe may retaliate, leading to a trade war that could trigger a global recession, as tariffs do not create prosperity but rather the opposite.
A potential credit boom in private equity and debt, not reflected in banking statistics, coupled with a possible liquidity crisis if the yen declines further, could exacerbate the 2025 downturn by drying up global financial markets.
Zulauf sees Europe entering a 3-4 year recession due to an aging population, low growth, and ineffective politicians unable to adapt to a changing world.
The US is viewed as the locomotive for the global economy, with a weakening US economy potentially triggering a deflationary hit worldwide.
Zulauf advises becoming defensive in equities, avoiding bonds for long-term investors, and investing in real assets like equities and gold to weather significant declines.
For real estate investments, Zulauf recommends focusing on young nations with young populations, as opposed to problematic markets in Europe due to demographic challenges.
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