In this week’s episode of Retire in Texas, Darryl Lyons, CEO and Co-Founder of PAX Financial Group, takes a deep dive into the complex and controversial topic of tariffs – unpacking what they are, why they exist, and how they affect not just global economies, but your personal financial plan.
Darryl explores the motivations behind America’s shifting tariff strategies, from supply chain security to deficit reduction, and how political perspectives, media bias, and management styles shape the broader conversation. With clear explanations, real-world examples, and a steady focus on the “why” behind the policy decisions, this episode provides the insight you need to navigate today’s volatile market with more confidence.
Key highlights of the episode include:
• Four primary reasons tariffs are imposed – and what each means for your investments.
• How political bias clouds the public discourse around trade and economic strategy.
• The ripple effect of tariffs on companies like Tesla, Intel, and broader stock market behavior.
• What history (and the Smoot-Hawley Act) teaches us about tariff backlash and economic recovery.
• Why patience, perspective, and long-term thinking are essential in uncertain times.
Whether you’re watching the headlines with concern or just wondering how it all ties back to your retirement plan, this episode offers grounded, big-picture thinking for today’s investors.
For more insights or to connect with a PAX Financial Group advisor, visit http://www.PAXFinancialGroup.com.
Like what you heard? Share this episode with a friend and remember – you think different when you think long term.
Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. This information is general in nature only. It’s not intended to provide specific investment, tax, or legal advice. Visit PAXFinancialGroup.com for more information. Okay, so I want to talk tariffs. Before I talk about tariffs. Let me make sure that you go to the Connect with Us button at PAXFinancialGroup.com
You’ll be able to connect with a financial advisor. It’s a 15-minute consult just to see if we’re a good fit. That’s it. And if you have friends that need help then that’s the place to send them. Okay. So, I want to talk tariffs and let’s start with the big picture for a second. So why do tariffs exist?
You know if you think back to the 1900s, early 1900s, you know, the idea was to provide a little tailwind to some economies that needed to get up and running, specifically after some pretty big disasters – World War one, World War two. So, you know, wanting to help them out, and then it kind of has changed a little bit over the years.
It’s been, okay, they’ve got these tariffs, and these other countries keep increasing their tariffs on us. And we’re like, okay, that’s cool. Like that’s fine. And they keep doing it and doing it. And I think what happens is, and you’ve seen it before. There’s this mentality, this belief system in globalization. And it’s basically saying, how can we find a way to take money from United States and put it in the hands of other countries.
And there’s a lot of people in high places that want to do that. And the way the tariff math works, is right. That’s part of their game plan. And I’m not being, by no means am I being, in any way, I want to say a conspiracist, maybe. No. They exist. It’s very real people.
People want to shift wealth from greedy America to other countries and, the question is, has it been working? Has the rising tide lifted all boats? Another reason, and this one maybe has more merit for tariffs is that if you increase trading between countries, we won’t have another World War two, we’ll be doing business with each other.
I could see that. In the 1930s, we wanted to readdress this and kind of level set. And so, there was this thing called a Smoot-Hawley act. A lot of times we reference that, and that was when we decided to reset these tariff things. And many people say, hey, look, if we go back and look at that act like you can do Wikipedia or whatever, look at it, you can say it exasperated the depression.
And so some people say, hey, what we’re doing now is similar to the Smoot-Hawley act, and it’s going to exasperate a bad economy. So that’s the detractors often reference this 1930 act. So, what do tariffs do? What’s the intent behind the United States imposing tariffs. There’re really four reasons. One is to decouple. So, you know think about most pharmaceutical drugs are made overseas and we saw during Covid that could be very problematic.
I don’t think anybody, any of us and our families want to be in a situation where we can’t get access to the drugs that we need, whether it’s blood pressure or whatever else, and that’s the risk that exists today. And so how do we bring that manufacturing back over here? Number two is to negotiate to get a better deal.
Sometimes this negotiation results in temporary tariffs. Number three is just to rebalance the economy. You can make chips in Taiwan, but we also need to make chips here, so we don’t mind. We don’t need to necessarily decouple, but we need to have a little bit more balance. And then the fourth reason and I actually discounted this a little bit, but now that I’ve done more homework is funding.
And this is basically just to make more money. And so that’s the fourth reason I think this is just completely aligned with the Make America Great Again agenda, versus globalist. And I think it’s playing out in real time on television. But we need to make sure this is probably the most important part. We need to make sure that we understand the big picture.
What’s the big, big picture here? The big picture is we are on financially as a country, on an unsustainable path. Everyone I talk to, they don’t say exactly like this, but they say I want a fair shake in this country, and I want to leave the world better than I found it for my kids. And we are sitting here looking at the country saying, I’m not leaving you better than I found it.
And that’s very frustrating. And it is frustrating when you do nothing about it. And so, Trump comes in and says, we’re going to fix that, and here’s how we’re going to fix it. We run a $2 trillion deficit, meaning that we spend $2 trillion more than we make. Pretty simple. So, Elon Musk does this DOGE thing and says we’re going to cut a trillion.
First, he said 2 trillion, but he really meant a trillion. There’s a funny story behind that. But that’s neither here nor there. He said we’re going to cut a trillion in expenses. So now you need to either cut another trillion or you need to make another trillion. And so, we’re going to cut a trillion in expenses, DOGE.
And we’re going to make another trillion in tariff revenue. So that closes the gap. You’re now spending equally what you make and your future growth. If you can get a bigger shovel, make more money can be used to pay down the prior deficits. That’s the game plan. That’s the strategy. If anyone takes any issue with that.
I’d be remiss because that’s it. Now, a lot of people question there’s some peripheral stuff like, oh, Trump’s greedy or you know, there’s whatever reason I’ve seen some stupid, stupid reasons. That’s the reason that this is happening, is we’ve got to get this thing. I don’t even think there’s a question. If you go really deep, you go Schumer, Pelosi, everyone else.
I think they all agree with that premise. In fact, I know they’ve been well documented that they support re addressing this deficit and they support readdressing tariffs. So, they’re all on record on this needs to be done. I think there’s peripheral conclusion like people who just say silly things that they find that there’s a reason why this is happening, but that’s the reason why is we’ve got to close this gap.
But the bigger debate is in the how. So, the why, I don’t think is up for debate. If people are honest with themselves. There’s some again, conspiracy theories. But if you’re honest, I think the why is we got to get this country back on track. The “how” is where it really gets tricky. And it’s crazy because I’m watching this stuff and reading it, and I see it’s so filled with bias.
Like, you can see these objectives, scientific economists from Harvard, and they’re giving reasons for or against and they just reek of bias, both sides. And they come across as objective. And I’m just don’t forget that there’s some people with strong opinions. And it’s not like as soon as Trump got elected, their opinions went away.
They’re still there. And now they’re manifesting in a tariff dialog. And so, the supporters, remember Trump, coming from the 1980s generation, which is kind of this Jack Welch, who was a business owner that came in and reconstructed and tore apart a business for it to be bigger and stronger on the other side, this group of people, they’re out there.
You know who they are. I saw one just recently, run a municipality, and he came across and looked at the municipality and said, this is not sustainable. We’ve got to do something different. And he came in, got a bunch of stuff, found more money, and people showed up with pitchforks at those council meetings and social media was on fire.
They hated him, but he didn’t care. He was focused. That’s the Jack Welch mentality. That’s the Donald Trump mentality. 1980s guys. It ran through 87. They buckled down the chin strap and made it through. Some of them got scars; some of them got killed. It was a tough time. But they come from this Jack Welch era, which is a mismanaged company.
You fix it and you do whatever it takes to fix. And if people don’t like me, I don’t care. The challenge that we have with this mentality is juxtaposed to the previous administration where we didn’t get much information. You’re getting it real time. You’re getting the negotiations nearly like multiple times a day. So, it’s kind of crazy to think that there’s even a willingness to share that information real time.
I’m not giving Trump a big pat on the back, but he’s negotiating and we’re hearing real time how he’s negotiating. And he could even change his mind. And now you’re going to see clips of, you know, undermining his strategy. Well, he said this now, he said this, and he said this, and now he said this. And so, I think it subjects him to second guessing and that I think I would agree that’s a real problem.
I think the supporters would say, you know, hey, at least we’re getting real time information, even if we don’t like it, even if he says, you know, we’re putting a tariff on Canada because of fentanyl, and then he changes that. We’re putting a tariff on Canada because we want to negotiate. You know, the real time information is a challenging one.
And, I think for a lot of people now move on to the detractors. They say, the how. Many people say the why, I get it, I agree with you. But this how – it’s chaotic. They say there’s no real playbook. The academics and the theorists look at history and say, this is not sustainable. We can’t do this. And I think the chaos is concerning for a lot of people, or at least it feels chaotic.
If you study Trump and the way he does business, he does. And this isn’t biased, this is known. He does surround himself with a lot of advisors. There’re different management philosophies, by the way. This goes into management styles. But his style is he gets a bunch of advisors and then he makes a decision based on all that information.
So, the detractors would say he’s doing it independent of any advisors. So, I’m just looking at the history of how he’s done things. So, I don’t know how he’s doing it right now. But the detractors again say not only is this chaotic, but what they say is we’re going to end up becoming a more isolated society and we’re going to go back.
We forgot about the purpose of globalization, where it’s trading with other countries and that will reduce the probability of a war. So that’s what the detractors do. And they might not say directly, but they do go back to the globalization is better for the world. And you should probably, you just can’t see these people’s bias because they don’t wear it on their sleeves.
Let me give you an example of how this bias is articulated. Senator Elizabeth Warren, she said, and I’ve heard this in multiple places, greedy corporations, that’s kind of like her shtick, I guess, at least in this situation. She said, hey, look back in when Trump put a tariff on washing machines.
Do y’all remember that? Everyone’s like, yeah, I remember that. Okay. So, get this. When it ended up falling back on the consumer because now all washing machines got more expensive. But she said check this out. The greedy corporations, they actually also increase the price of the dryers. So, these greedy corporations and Trump’s leading them are going to make more money and the consumer is going to make less money.
Okay. All right. Sounds interesting. Factual. Yes. The other side of the coin. Prices went up. Yes. Washing machines, they went up in price. But because stores sell both of them as pairs typically rather than just increasing the price of the washing machine, they spread that price increase over the washing machine and the dryer. Not a greedy corporation, just adjusting based on the market and optimizing the profit margins to sustain business.
Did it fall on the consumer? Yes. Was it a greedy corporation just trying to gouge people? No. So you see how this one example can be framed differently based on people’s inherent biases. Her inherent bias is – Trump is evil, we know that. And then also greedy corporations, another biased person might spin it in such a way that it was good for the economy and good for the consumer.
So, here’s where we’re at right now is we’re on the how, the why, I don’t think is the issue. I think if we’re real with ourselves, we can understand, hey, we got to get out of debt and we got to redo these tariffs. They’re just out of whack. So, I don’t think the why is the problem. It’s the how that we’re really fighting over right now.
And it does create some chaos in the market as we’ve seen. And so how does this affect your money. Well, you own typically companies right. You own Microsoft, Google, AT&T, you own a bunch of companies. Generally speaking, you may lend money to companies. That’s called a bond. But a stock is you own a company.
So, let’s say you own Tesla. It’s a good example. 40% of Tesla’s battery supply chain relies on Chinese companies. So how are they going to get their battery supplies if there’s these tariffs or even if trade stops, how’s that going to work? That big question mark is why the stock is going down. And typically, just being more volatile or Intel is another example.
Intel, they’re less volatile because a few years ago they started doing this. Remember I talked about the four reasons why you do tariffs. But they started reshoring. They started coming back to the United States in anticipation. So yes, the market’s volatile, generally speaking. But some people are moving from like let’s say an analyst or a manager might move money from Tesla to Intel because they feel Intel is safer and is already ahead of the game.
This will take years to shake out. It really will. In fact, a part of this is to bring businesses and jobs back. Part of is to make money. The detractors will say, well, you’re going to bring manufacturing back Trump, but that’s going to take 5 to 7 years to build these plants. Okay. All right.
You’re watching this real time. You’re going yeah, that’s true. That’s true. Here’s the supporters. The supporters say okay, we saw during Covid manufacturing plants go up pretty darn fast. And the primary reason that manufacturing plants don’t go up fast is because it takes two years to get an environmental permit. And so, let’s get rid of the permitting process or at least expedite it.
And then we’ll get these manufacturing plants much faster. So can you see how on the how, not the why the how, people are spinning this left and right. And it is all rooted back on whether they like Trump or hate Trump. And so, it’s really hard for us to get a handle on how this is working. And, it’s created an environment where there’s something called a VIX index, VIX, that measures volatility.
I’m actually looking at real time right now. It’s up 10% today. It measures the real time volatility. And we’re over 50 means that we’re hyper volatile. You don’t need the VIX index to tell you that. But that’s where we’re at today. So, in conclusion I know I’ve been a little long winded. But I wanted to make sure that you understood this.
Don’t forget the “why.” Don’t forget the “why.” This is not sustainable. And I think if we were all honest with ourselves, we knew that there was going to be some pain. And I’m with you. We knew there was going to be some pain to get on the other side of this, but it was not sustainable.
We want to leave this world better than we found it. All of us have to be patient. I, myself included, there’s going to be stuff that happens that’s going to be tricky along the way. I mean, if you look at people during a certain two-week period, people rushed out to buy cars because they were concerned about tariffs on cars.
People rushed out to buy iPhones. All of this is causing a very choppy market. Don’t panic. Don’t get frustrated. Stay in the game state. You know, we and your advisors typically have built a portfolio to weather this. And I think about it this way too. We come up with midterms around the corner. I don’t believe any administration is going to want the economy to crash.
And there are tools that they can use, including the fed, to course correct before midterms, which is an important time. So how long will this last? If you were to ask me, I don’t know. You know, I mean it could last three or six months. And that’s just simply a guess because you’re going to need to start.
The administration is going to need to start showing some results for people to get elected, to get reelected. So, I would imagine that 3 to 6 months is probably a reasonable time frame to start showing some real wins. In the meantime, stay the course. Think long term if you miss out, if you decide to pull out, you might miss out on one day like April 9th, the market went up 10% in one day.
Imagine if you freaked out and you pulled out the day before. Don’t do those types of things. Stay the course. Think long term and just know that this is not going to be perfect. There’s going to be ebbs and flows. But for the most part, the big why, is we’ve got to do something different. So, I hope that helps you today.
Feel free to email me Darryl@PAXFG.com with any questions or comments. And remember you think different when you think long term. Have a great day!
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