Name: BREAKING: Tariffs Just Triggered Massive Crash
Uploaded: 2025-07-17T09:41:19.000Z
Duration: 10 min 28 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

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Any extra income the government will make from tariffs will be wiped out because we have new inflation numbers.

Gerund

Inflation seems to have risen in June, and I have told you that this is just the beginning and inflation is going to keep rising as a result of these tariffs.

But the tariffs aren't just the problem, and inflation isn't just the problem.

The consequences of this inflation now can have catastrophic impact on the entire economy and can lead to a massive crash.

Now, if you think I am exaggerating, let me explain.

If you look at the consumer price index, which is the main tool that we use in order to measure inflation, it has risen by 0.3% in June.

That is much higher than the previous 12 months.

In fact, in previous 12 months, inflation didn't rise instantly when Trump announced the tariffs, and everybody was like, oh, the tariffs did not cause inflation, so let's have lower interest rates.

But there are 3 good reasons why that did not happen.

First of all, businesses keep a very high inventory.

Businesses often have inventory for the next few months.

So if there is a crisis, if there is a catastrophe, business will continue operating.

If you have a problem with your supplier, you have an inventory in your backyard to keep supplying your products to the market.

Secondly, businesses increase prices gradually.

If you suddenly pop up to your favorite store and you see that prices have doubled overnight, you probably will start looking to other alternatives.

And that's why businesses know how sensitive you are to prices.

They know that you are making this much amount of money, and you will spend on this kind of products this amount of money.

So if you suddenly pop up to the shop and you see that prices have doubled or tripled, you're not going to buy that.

You will suddenly start thinking, oh, do I need this?

Maybe I will start looking for other alternatives.

And maybe there are places where you can get the exact same thing at a cheaper price.

So you as a business, how do you prevent that?

You will start increasing prices gradually.

And then a few months passes and then you increase the prices again and so on and so forth until you will adjust your entire business model and you will be able to deal with those high tariffs and you're making the exact same profit margin.

But the consumer on the other side kept buying from you because he did not feel the instant price shock.

However, he's paying much more right now.

And that will be reflected in the inflation numbers.

Secondly, businesses have to prepare for the unpredictability.

What makes business possible is predictability.

You know, these are the prices, these are the rules, these are the supply chains and you can build business upon it.

Everything that Trump has been doing so far is being unpredictable.

Yes, it might be good from one side, but it's hurting businesses.

So if we know there is so much unpredictability, how do we prepare for that?

We are going to charge our clients a little extra fee in order for us to be on the safe side.

The main question is that, what does it mean for you?

First and foremost, there are not going to be cuts in July.

Everybody was talking and even one of the people who sits at the board of the chair said that there is a probability of interest cuts in July and everybody was hoping for it.

However, it's not happening because we have a completely opposite trend of inflation going down.

Now, we know that inflation is rising and we have to wait for more clarity until we know the final outcome of inflation.

In fact, what could happen is that the Fed might even increase the interest rates in order to battle that inflation.

We have another few meetings from the Fed that are going to happen in September, October and December and from everything that I see is that if the trend is going to continue the way that it is right now, then no interest cuts this year.

And that was actually some of the things that I told you, in fact, back in April, if I'm not mistaken, that interest cuts are not happening this year because we cannot possibly measure the full impact on tariffs on the economy.

Secondly, it puts a huge pressure on the bond market.

High inflation forces the yields on the bonds to keep rising.

In fact, it forces the government of the United States to offer higher interest rates to attract enough investors.

If it was a small debt, then it wouldn't be a problem.

But the debt is so huge that there aren't enough investors on the other side.

Which means that with this kind of inflation, you will have to offer them a higher rate for them to sell their other investments, even investments in the stock market, for example, to buy your government bonds.

The fundamental problem is that over the last 15 years or so, we have been having a period of very low interest rates.

Starting from 2009 up until 2022, interest rates were at almost 0%.

There was a couple of years starting from 2017 up until 2019 for 2 years when inflation or interest rates climbed to over 2%.

However, after that, they immediately went down to almost 0%.

The government has been borrowing trillions of dollars for such a long period of time at a low interest rate, and that did not cause any kind of pressure on the budget of the United States.

Now, we have a period of very high interest rates and all of that debt must be refinanced.

And if you are wondering, why would we refinance so much debt?

Because that debt has an expiration date.

If it's a 2-year government bond, for example, then you have borrowed it and it's time to pay off that debt and you don't have the money to pay off that debt, you issue a new debt and that's what we call in the bond market as refinancing the debt.

And this year alone, the government has to refinance probably around 10 trillion dollars of government bonds and next year we have to refinance another 12 trillion dollars.

It's probably something between 20 to 22 trillion dollars between this year and next year.

And all of that will be refinanced at a much higher interest rate because inflation is rising.

And because inflation is rising, it forces the Fed to adjust into the market and keep interest rates very high.

So from one side, the US government is making billions of dollars from the tariffs.

You bring something to the United States, but to sell it in the US, you have to pay the government a tariff of 30% or 50%.

Yes, that price will be passed down to the final consumer.

However, the government is making some kind of money.

So you might assume that the government can use that money to pay off part of the debt.

The problem is that it turns the government's budget into a bucket with holes.

On one side, you're increasing the tariffs and you're increasing the revenue for the government.

On the other side, now you have to make higher interest payments.

So let's take an example of Japan just to simplify the entire version.

And now you bring a Japanese guard to the United States to sell it in the United States and you pay the 40% tariff to the US government.

Now Japan holds like 1.2 trillion dollars of US government bonds.

If you're selling the exact same bonds back to the Japanese government, you are using the tariffs that you're collecting from Japan to pay more interest to the Japanese government, which literally destroys the entire point of making that money in the first place.

You're simply overcomplicating everything and making governments wealthier, increasing the prices for the consumers and achieving nothing at the end of the day.

But this is just the beginning because the United States haven't signed trade agreements with its most important partners.

Now if you look at the major partners or the trade partners of the United States, you instantly see that at the top of the list we have Canada and Mexico.

Do we have a deal with Canada and Mexico?

We have like a 30% or 35% with those countries.

There is almost a deal, but that deal is not final and we have no idea if that deal is going to be final.

So there is no deal with Germany, there is no deal with Netherlands, there is no deal with Ireland, Italy or France.

Until the United States will sign trade agreements with all of these major countries, especially the largest trading partners such as Mexico, China, Canada and the European Union, we cannot confirm that inflation is not going to continue rising.

Remember, inventories will be over sooner or later.

You cannot possibly depend on the fact that those inventories will last forever, which means that we are going to see higher prices.

And if the final deal, for example, with the European Union is going to be much higher than we expected, then inflation will continue rising.

You know, but what is more triggering and what is more fascinating, or I would say what is more scary is that we can't even say that how the final deal is going to look like with any of those countries.

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