You've seen the headlines about the Trump Tariffs. Today, Nicole explains how they're going to affect your wallet, and what you can do to protect yourself. All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, member FINRA & SIPC. Public Investing offers a High-Yield Cash Account where funds from this account are automatically deposited into partner banks where they earn interest and are eligible for FDIC insurance; Public Investing is not a bank.
Chapter 1: How does Public Investing simplify bond investments?
It's me talking about public again, obviously. Are you surprised? It is my favorite brokerage after all. By now you know Public is the only place I personally buy bonds. If you haven't heard my spiel, in the olden days, I would buy treasuries through the government website and it would always take forever. And also the branding was horrible.
It kind of looked like the Toys R Us website back in the day. But with Public, it's simple and easy to invest in treasuries right from your phone. There are literally thousands of bonds to choose from on Public, not just government bonds, corporate bonds too. You can use Public for more than just your bond investments, of course.
On public, you can invest in stocks, ETFs, options, crypto, and they even have a high yield cash account where you can earn 4.1% APY on your cash. And there's an exciting new offering on public that I cannot wait to tell you about. Now you can invest toward your future self through retirement accounts. On public, you can open a traditional IRA or a Roth IRA or both. I mean, why not?
If you're looking for a simple yet sophisticated investing experience, head over to public.com slash money rehab. One more time because trust you will thank me later. Public.com slash money rehab. This is a paid endorsement for public investing. Full disclosures and conditions can be found in the podcast description.
You have probably heard me call myself the fee police because I hate, hate, hate fees. It makes it really hard to stay on budget, which then can delay our financial progress. When we're trying to make progress, life's curve balls often feel like taking one step forward and two steps back.
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Chapter 2: What are the benefits of using Chime for your finances?
A time checking account makes financial progress easier with features like no maintenance fees and fee free overdraft up to 200 bucks or getting paid up to two days early with direct deposit. Learn more at Chime.com slash MNN. When you go to Chime.com slash MNN, you'll see all the reasons I love Chime. Like, did you hear me say that Chime allows you to overdraft up to $200 with no fees?
Chime also has no monthly fees or maintenance fees. And Chime has over 50,000 fee-free ATMs. So as the fee police myself, I approve. Make progress toward a better financial future with Chime. Open your account in just two minutes at Chime.com slash MNN. That's Chime.com slash MNN as in Money News Network. Chime feels like progress.
I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Money Rehab Well, there has been a whole lot going on in financial news while I've been on kind of sort of maternity leave.
Chapter 3: Why should you care about tariffs?
It wasn't hard to pick the first stories to cover as my first episodes back because two of the biggest stories in financial news right now are undoubtedly all things Doge and tariffs. Yesterday, we covered all things Doge. Today is all about tariffs. But as always, I'm going to focus on why this matters to you and your microeconomy.
For starters, the way we talk about tariffs right now doesn't necessarily line up with how they actually work. So it's just worth reminding ourselves what tariffs are without any geopolitical frills. Here's the simple definition. A tariff is a tax on imports paid by the company bringing goods into the country.
Chapter 4: How do tariffs and duties impact iPhone prices?
So, for example, if you are listening to this on an iPhone, a lot of the components of the device that you're holding in your hand come from China, and iPhones themselves are assembled in China. When your brand new ready-for-sale iPhone arrives at a U.S. port, Apple... Not the Chinese government, not the manufacturers in China who made the components, but Apple pays an import duty to the U.S.
government before they can put the iPhone on shelves. Tariff and duty are sometimes used interchangeably, and while they're very closely related, they're not exactly the same thing. A tariff is a broader term for taxes on imports or exports usually set by a government to control trade. A duty is a specific amount of tax owed on a particular product.
So in the case of your iPhone, the tariff is the trade policy that sets the tax and the duty is the actual bill Apple has to pay when those phones hit U.S. soil. As we're seeing now, tariffs are bargaining chips countries play against each other in geopolitical negotiations and conflicts. When he was campaigning, Trump said that he would introduce a lot of tariffs, and he sure has.
The ones of most consequence are the tariffs on China, Mexico, Canada, and steel-producing countries. For a long time, the U.S. didn't have to think much about tariffs or duties on goods from two of our biggest trade partners, Mexico and Canada. From 1994 to 2020, the U.S., Mexico and Canada operated under NAFTA, the North American Free Trade Agreement.
Under NAFTA, tariffs between the three countries were virtually nonexistent. And this wasn't just about tequila and maple syrup. Canada, for example, is a massive exporter of natural resources like gas, minerals and lumber. An estimated 24% of all U.S. steel imports and 60% of U.S. aluminum imports come from Canada. Remember that because it's going to come up later.
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Chapter 5: What changes did the USMCA bring compared to NAFTA?
NAFTA was sunset because critics, including President Trump, argued that it incentivized outsourcing, led to job losses in U.S. manufacturing, and failed to protect American industries. Trump renegotiated the deal and in 2020 replaced NAFTA with the United States-Mexico-Canada Agreement, USMCA.
The USMCA introduced stronger labor protections, especially for Mexican workers, higher requirements for North American car production, and updated digital trade rules. The goal was to create a more balanced trade relationship between the three countries while addressing some of NAFTA's shortcomings.
Trump, like other pro-tariff politicians before him, sees economic reasons for instituting tariffs as well as political ones. Trump views tariffs as an easy way to raise revenue without directly increasing taxes on individuals. He also sees them as a way to encourage American manufacturing by making foreign goods more expensive, theoretically pushing consumers toward U.S.-made alternatives.
Chapter 6: Why does Trump support tariffs?
Tariffs on Chinese goods, of course, have pros and cons. But generally, politicians on both sides of the aisle support tariffs on Chinese goods to some extent. When Mexico and Canada enter the mix, things become a little bit more spicy. The difference here is that China and the US are somewhat adversarial. Mexico and Canada are our homies.
Canada in particular is a close partner of the United States. We haven't had a real fight since 1812. So when Trump proposed a sweeping 25 percent tariffs on products from Canada and Mexico on February 1st, Mexican and Canadian politicians were shocked.
When Canada and Mexico asked what they could do to avoid tariffs, Trump's demands were initially unclear, except for when he joked, question mark, that Canada could just become the 51st state. which is a little like joking about cheating on your spouse. It's just not funny. And eventually people are going to start asking some hard questions and maybe even go through your phone.
Then Trump spoke with the leaders of both countries respectively and reached agreements to pause the implementation of tariffs until March 6th, my birthday Eve, so long as Canada and Mexico promise to provide more security at the border. If a 25% tariff on Mexican products goes through, you can definitely expect to feel it at the grocery store. In 2021, Mexico provided almost two-thirds of U.S.
vegetable imports and almost half of U.S. fruit and tree nut imports, according to NPR. If a 25% tariff on Canadian products goes through, we will also see higher car prices and construction costs. Plus, Canadian Prime Minister Justin Trudeau said that he would pass retaliatory tariffs on things like whiskey, cosmetics and paper products.
But we don't have to worry about price hikes until the beginning of March when these tariffs are reconsidered. On February 1st, Trump also announced an additional 10% on Chinese goods, which he did go through with. China retaliated with its own tariffs on U.S.
goods, launched an antitrust investigation into Google, which is banned in China but still does a lot of business there through partnerships. And let us not forget the TikTok ban is ticking down in the background. This was all big tariff news, so I think we all thought we'd read our last tariff headline for a while. But then, on the 10th, Trump levied a 25% tariff on steel and aluminum globally.
And remember, tariffs are taxes paid for by the importing company, not the foreign government. There are exceptions for some American companies that relied on foreign steel last time Trump did this, not this time. And remember how Trump paused tariffs on Canada? Well, they're not exempt from this tariff. And remember, Canada is responsible for a quarter of U.S.
steel imports and more than half of aluminum imports. So this is a serious hit for them. So what does this mean for you? Well, luckily, we do have the benefit of hindsight and can look at the effect of the tariffs Trump implemented in his first term. Most economists agree that Trump's tariffs had a mixed effect on the U.S. economy.
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