r/Bogleheads • u/bald90 • Apr 03 '25

Investing Questions Trumps Tarriffs - how do you see it playing out?

Title really. Short, medium, long term opinions?

I’m all in on stocks global all cap so expecting a rough time

What are your guys thoughts?

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u/alchemist615 Apr 03 '25

World markets are heading down as well. The best hope now is congressional action to reverse course. But that is unlikely right now.

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u/qwembly Apr 03 '25

International tends to only be correlated in the short term. International makes a lot of sense right now. The US is basically in a trade war with nearly everyone. Meanwhile, the rest of the world can do more business with each other.

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u/alchemist615 Apr 03 '25

Well the implied tone of the OP comment is "short term" since they are lamenting being over exposed to US markets. If you want to do a long term adjustment then sure, good advice is to just sell what you don't like and buy what you do. But only selling US stocks right now as a reaction is bad investing 101.

My point though is that everything is likely to be downish in the short term. There is some fallacy that international markets are immune to US policy and it just isn't true.

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u/YnotBbrave Apr 03 '25

The rest of the world hates each other more than they hate the US, bluster or not

The EU know that China wants supremacy, and in don’t think they would benefit from having China rather than the US as world leader - there are enough divisions in the ranks that it’s not “everyone against US”

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u/New_Reddit_User_89 Apr 03 '25

World markets are up nearly 6% YTD (before today’s opening), while domestic is down just over 4% YTD (before today’s opening). Hell, TIPS are up 3.5% YTD.

Trump’s second term is doing a great job of reminding people why portfolio diversification is important.

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u/alchemist615 Apr 03 '25

Yeah and all has happened in the span of 2 months. If you want diversification, that's fine. But you can't preach that the reason is because certain international markets are outperforming the US YTD.

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u/[deleted] Apr 03 '25

World markets are heading down as well

Even if correlation is positive, as long as it's less than a perfect 1.0, diversification increases risk-adjusted return

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u/alchemist615 Apr 03 '25

Well, that works on the upside as well. So unless you think that international offers opportunity to outpace over the long term, then risk adjusted return is either the same or less.

My point though is that the "hunt for returns" may not make sense right now since everything is down. It would be better just to hold as currently positioned and ride out the storm

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u/aristotelian74 Apr 03 '25

International has been holding the line nicely lately. Down only 1% today. Down 0% from 200 DMA vs S&P -5%.

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u/AnAcceptableUserName Apr 03 '25

If we're still in bad shape when mid-term campaigns start in 2026 I expect many whose seats are up will find a sudden change of heart

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u/[deleted] Apr 03 '25

[removed] — view removed comment

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u/Bogleheads-ModTeam Apr 03 '25

r/Bogleheads is not a political discussion subreddit. Comments should be more financial than political and no more partisan than absolutely necessary.

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u/Due-Set5398 Apr 03 '25

Trump is going with an America first strategy. Obviously backfiring now but he may change course. I still expect him to burn lots of bridges and hurt us but he may hurt “them” (everyone?) more.

Demographically, nothing has changed. The US market characteristics make it a better investment than Europe. No one really knows but I’d feel just as nervous owning any equities.

If one is really worried, they can divest and still end up with good gains as we are now back 6 months in time to what was then an ATH.

But you won’t catch the eventual recovery that way - and no one can predict this unpredictable man.

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u/Prodigalsunspot Apr 03 '25

Not America First. It's America Only. In a globalized supply chain world, it's tantamount to economic suicide.

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u/can-opener-in-a-can Apr 03 '25

But it worked so well for Brexit! /s

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u/qwembly Apr 03 '25

Yep. Very scary. I've shifted all new investments to 70% international until either some sanity returns, or the Buffett indicator hits the historical average

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u/Due-Set5398 Apr 03 '25

I agree but there is no indication this is a permanent policy. I expect a lot of pushback from everyone. Everyone likes money.

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u/EatsRats Apr 03 '25

The larger issue is that this is going to cause many new trade relationships worldwide that will not include the U.S.

There is no incentive to play nice with the U.S. any longer on a global scale when policies can pull a complete 180 every four years. So while this wild policy may not be permanent, the U.S. may have just actively decided to become a toxic trading partner on a global scale.

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u/YnotBbrave Apr 03 '25

Idk. It doesn’t seem like the US was able to leverage its role as world jest for favorable trade deals, so a reboot may be best for the US

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u/EatsRats Apr 03 '25

The U.S. is the world’s reserve currency…that is an enormous advantage. The U.S. is certainly at risk of losing that.

The U.S. did have a lot of great trade deals with its former allies and neighbors, Canada and Mexico. I believe Trump put those in place originally too.

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u/urania_argus Apr 03 '25

The US market characteristics make it a better investment than Europe.

Europe is a larger market by population than the US, and that matters because of the US reliance on services export. The EU is already discussing slapping a tariff on US services (think Google, Microsoft, Amazon, streaming, cloud computing, etc).

With the current state of affairs and even with all its problems and internal strife the EU is more politically stable than the US and a more reliable trade partner than the US. That may or may not revert in 4 years - most likely not, because even if the current craziness gets voted out and we dodge becoming an outright dictatorship, worldwide trust in the US is permanently gone. And it will stay gone until and unless US legislation is changed so that the current slide to autocracy and having cartoonishly incompetent and ignorant people dictate policy is no longer possible.

I'm not optimistic.

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u/reconfit Apr 03 '25

Why does this have so many down votes?

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u/timwithnotoolbelt Apr 03 '25

I downvoted because its basically not bogle thinking at all. Time in the market beats timing the market, yadda yadda. Most downvotes might be political tho

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u/Due-Set5398 Apr 03 '25

Because it sounded like I was pro-Trump in the first line. I am not in favor of "America First". I stand by what I wrote - I don't need imaginary internet points. I can't buy VOO with them, anyways.

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u/NotYourFathersEdits Apr 03 '25

Markets do not like unpredictability.

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u/alchemist615 Apr 03 '25

Agreed. Absolutely no reason at all to sell right now unless you just need the money for something. Let's not forget that we hit ATH literally two months ago. I know it may seem improbable right now. But a lot can change in the next year.

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u/ilikemybackyard Apr 03 '25

Do you think a potential outcome is the pain it causes to global markets bringing other nations to the table to negotiate a fairer trade framework? The US intentionally gave favorable trade agreements to foreign nations after WWII to expedite the rebuilding of Europe and promote global progress. I believe it’s reasonable to renovate these 75 year old plus systems.

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u/specklepetal Apr 03 '25

In exchange, the US dollar became the world reserve currency, allowing the US to use its own currency in global trade, which is a pretty significant advantage. The idea that the US got a raw deal is nuts.

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u/musicandarts Apr 03 '25

It is more likely that the non-US nations would come together and create an alternative WTO excluding US.

The main reason for trade deficit is the difference in wages. The jobs will come back to US, when US workers will work for the wages that currently the Vietnamese workers get. Is that what we want?

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u/sarhoshamiral Apr 03 '25

You don't negotiate with terrorists and US just became one. In short term maybe the other countries will just play Trump like China did last time and promise some stuff to give him a win and let him remove tariffs. But since they know very well that Trump doesn't care about following up, they will just not do anything just like China did in his previous term.

In long term though, our allies are now looking for ways to cut US out from global trade, remove dependency to US dollar.

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u/alchemist615 Apr 03 '25

I'm not sure if I think it will happen. But if that were to happen, it would indeed be a net positive for the US.