The Tariff Trap

Tariffs are back...not as surgical tools, but as economic wrecking balls. Inflation, paralysis, and policy whiplash follow. What’s your defense when the rules change mid-game?

If a policy consistently fails to deliver what it promises, perhaps it was never designed to.

That was Chris MacIntosh’s response when asked which sectors would win or lose in the tariff wars now dominating the global economic chessboard.

“I don’t know,” he said flatly, before expanding the frame: it’s not just about sectors anymore.

It’s about the system…stagflation, fractured supply chains, and capital flows diverted into the safety of hard assets.

Tariffs, long dormant in the toolbox of statecraft, are back…and not in a subtle way.

Instead of surgical tweaks, we’re getting economic battering rams. And like any good blunt instrument, the damage isn’t clean or precise.

It’s systemic.

The Tariff Disease: Symptoms Include Inflation, Uncertainty, and Cursing in Boardrooms

At their core, tariffs do one thing very well: they make things more expensive.

That’s not a bug…it’s the feature.

Tariffs restrict supply, plain and simple.

Whether it’s raw materials, intermediate goods, or the finished product on your favorite Walmart shelf, tariffs force you to pay more and often get less.

According to MacIntosh, they are “inherently inflationary or stagflationary, almost without exception.”

Translation: rising prices and flatlining growth.

A double whammy that economists pretend they can fix by tweaking interest rates like they're fine-tuning a violin…on a ship that’s burning.

Let’s take sugar, a sweet example that turns sour fast.

The U.S. government subsidizes domestic sugar production to the point where it costs ten times more to produce than in Argentina.

Labor’s a big part of that.

In Argentina, you pay your cane cutter $2 an hour. In the U.S., it’s $20.

Remove tariffs on Argentine sugar, and their producers flood the U.S. market faster than a TikTok trend.

Leave the tariffs in place, and U.S. consumers keep paying too much for everything from cookies to ketchup.

That’s the tightrope. And that’s just sugar.

Apply the same logic to cars…specifically catalytic converters, which rely on platinum.

Where does platinum come from? South Africa.

Who influences South Africa’s mining output? You guessed it…China.

Slap tariffs on Chinese car parts, and you're not just impacting factories in Shandong.

You’re hitting South African mines, Detroit assembly lines, and that suburban dealership where nobody can pronounce “catalytic.”

Paralysis Through Policy

Markets are built on certainty.

Pull the rug out, and everything stalls.

Businesses stop investing. Banks stop lending. Capital stops flowing.

Imagine you’re a CEO looking to build a new factory in Iowa. You’ve got labor lined up, suppliers ready, and permits in hand.

Then…boom!…a new tariff policy changes your entire cost structure overnight. The spreadsheet breaks. Your boardroom fills with silence. Project delayed.

And that’s the feedback loop.

MacIntosh lays it out cleanly: policy uncertainty creates hesitation. Hesitation dries up capital investment. Capital shortages trigger supply constraints. Supply constraints create inflation. Inflation demands new policy. And round we go.

This isn’t speculation. We’ve lived this before.

The Smoot-Hawley Tariff Act of the 1930s did more to deepen the Great Depression than any stock market crash. The U.S.-China tariff spat from 2018 to 2020 wiped out an estimated $1.7 trillion in U.S. market value.

History rhymes…especially when it's bad poetry.

A Tangled Web of Wrenches

MacIntosh calls it a “matrix of first-, second-, and third-order effects,” but the reality is even messier.

Modern supply chains are so complex that a single tweak in a spreadsheet in Brussels can spike prices in Kansas and shutter factories in Malaysia.

Consider the humble automobile.

Its parts are pulled from a dozen countries: Indonesian rubber, Chinese microchips, Pakistani leather, and so on.

Tariff one node, and the shock travels the entire network.

Think of it like pulling one thread on your sweater and watching the whole thing unravel…while you're still wearing it.

Even when governments announce tariff exceptions, they read like riddles wrapped in fine print: exclusions for “certain categories of steel tubing not exceeding 16 millimeters in diameter when destined for industrial refrigeration use.”

Good luck planning your business around that.

Shooting the Messenger: Agriculture Takes a Hit

If you think your industry is safe because it’s domestic, think again.

Agriculture, the supposed darling of protectionism, is wildly exposed.

Case in point: in 2018, China slapped retaliatory tariffs on U.S. soybeans.

The fallout?

Billions in lost sales, surplus stock rotting in silos, and Midwestern farmers wondering whether to plant or just go fishing.

So no, tariffs don’t just “protect American jobs.”

They disrupt them, distort them, and in some cases, destroy them.

The Only Safe Bet? Stuff You Can Drop on Your Foot

In times of uncertainty, investors run to what’s real…literally.

Hard assets: gold, oil, real estate, and other tangible commodities.

As MacIntosh put it, “When we’ve had situations like this in the past, hard assets typically outperform other sectors.”

And there’s precedent.

During the 1970s, a perfect cocktail of inflation and geopolitical messiness sent gold from $35 to $850 an ounce.

Real estate held its ground.

Commodities like copper and oil turned into wealth generators. Not because they were flashy, but because they were useful.

Hard assets can’t be printed, legislated, or tariffed out of existence. They don’t care what the Fed says or who’s up in the polls. They just are.

But, let’s be clear…they’re not foolproof.

Real estate is local. Commodities are volatile. And storage costs aren’t imaginary.

But compared to equity markets dependent on low interest rates and stable policy?

It’s like choosing between a Swiss watch and a roulette wheel.

Tariff Theater: A Freaking Matrix of Hypotheticals

Chris MacIntosh’s refusal to name winners and losers isn’t a hedge.

It’s a recognition that this game is rigged for confusion.

Tariffs don’t function like dials; they’re more like dominoes on a trampoline…chaotic, unpredictable, and prone to surprise injury.

Trying to model every possible impact is like building what he calls a “freaking matrix” of assumptions and if-then clauses.

Better to step back and simplify.

His framework? Bet on inflation.

Prepare for supply chain shocks. Diversify into hard assets.

Ignore the noise and trust what doesn’t change: scarcity creates value. Volatility rewards preparedness. Governments rarely stick the landing.

When the Fog of Trade War Thickens

In a world where a tweet can upend a supply chain, clarity is power. And simplicity is a weapon.

MacIntosh isn’t waving a white flag…he’s planting a signpost.

Stop trying to guess which sector will “benefit” from tariffs. That’s a fool’s errand.

Focus instead on positioning yourself in assets that can survive, even thrive, when the rules change mid-game.

Tariffs are the economic equivalent of throwing sand into a machine already overheating from bad monetary policy and too much debt.

Expecting it to function better afterward is wishful thinking. The only surprise is how many still expect otherwise.

But how do you position yourself in a system designed to confuse?

In this environment, where logic is scarce and volatility is abundant, your best friend is tangible value.

Because when things get weird…and they always do…the winners are the ones holding something real.

In a world ruled by uncertainty, clarity is underrated. Invest accordingly. And for goodness’ sake, read the fine print on those sugar imports.

👉 Haven’t read Insider issue 310?