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John Norris (00:30): Well, hello again, everybody. This is John Norris at Trading Perspectives. As always, we have our good friend, Sam Clement. Sam, how are you doing, man?
Sam Clement (00:35): John, I’m doing great.
John Norris (00:37): How are you doing? Listen, I’m doing fantastically—just like the investment markets—because, as you well know, this week Donald Trump came out and gave everyone a great big present and said the tariffs with China are going from 145% to 30%, or something along those lines. And my goodness, you would’ve thought Christmas had come early.
Sam Clement (00:55): Well, it’s amazing how quickly the window of what’s considered good and bad shifts. Just a short time ago, 145% was seen as terrible, and now people are celebrating 30% as a win. That ignores the fact that previously, there were either no tariffs or significantly lower ones. To me, the interesting part is the market has basically fully recovered, but the tariffs haven’t fully gone away.
John Norris (01:25): Exactly. And thank you for that. I’m laughing because it’s true—the reaction of the stock market to the announcement that tariffs are dropping from 145% to 30% on China was, in my estimation, kind of head-scratching. Sam is absolutely right. We went from a weird number like 145%—which I’m not even sure where they came up with—to 30%. Okay, how did we arrive at that? Maybe there’s some methodology, but if there is, I don’t think you’re aware of it. I know I’m not. And that’s part of the problem.
(02:19): It’s not just that we’re throwing around tariffs or the threat of them—we can deal with that. The bigger problem is the capriciousness of it. One day it’s this, the next day it’s that. Today it’s 145%, tomorrow it’s 30%—who knows what next week holds? We hear, “We’ll do this for 90 days, then reassess.” Sure, investors might like that in the short term, like they did this past Tuesday. But in 90 days, we’re going to do this song and dance again. Maybe it’s 60 days next time.
Sam Clement (02:51): Or 30% this week and 40% next week.
John Norris (02:52): Right. We just don’t know. And in that kind of environment, how can businesses truly function?
Sam Clement (03:03): That’s kind of the root issue. Even if the tariffs were fully rolled back, if there’s no long-term plan, businesses can’t operate effectively. How can they make decisions based on a policy that could literally change by the hour? Regardless of the tariff level, the uncertainty creates confusion—especially when it comes to planning.
John Norris (03:35): I’m not sure it’s confusion as much as just… inaction.
Sam Clement (03:39): And it seems like this is all part of the bigger push for onshoring—bringing business and investment back to the U.S. But the other side of that is lowering income tax rates, increasing estate tax exemptions, and things like that. It’s one half of a broader strategy. But we haven’t even been able to focus on that.
John Norris (04:08): Well, they finally got around to it this week—sort of. The House started talking about some kind of tax initiative, essentially baking in some of the 2017 provisions and making some permanent. For our purposes, the estate tax exemption is being set at $15 million, which is great. Not much change to marginal rates though, and nothing new or groundbreaking that I could see. So maybe not the “gift” people hoped for, but better than more tariffs.
(04:53): But all told, from stem to stern, I’ve been disappointed with what’s come out of Washington this year. I thought we’d be further along. I did expect the economy to slow down some, but if you told me that by mid-May we’d just now be talking about extending the 2017 tax cuts, I would’ve thought that was crazy. And if you told me we’d be applauding a 30% tariff with China? Worst-case scenario.
Sam Clement (05:35): The market’s reaction is interesting because it’s a weighing mechanism for future expectations. Even if 145% wasn’t going to stick, the mere removal of that worst-case tail risk is worth something. The market reacts positively just by taking that possibility off the table. But there’s still plenty of uncertainty and headwinds.
John Norris (06:29): Exactly. Is 30% really the best-case scenario? People are acting like it’s a win, but at that level, there’s zero chance we bring any meaningful production back onshore. It’s still not economically viable. Maybe if it were 300%, businesses would seriously consider it. But 30%? That just makes imports a little more expensive—business as usual.
Sam Clement (07:37): One question I haven’t gotten a good answer to is: what about global businesses where the U.S. isn’t the sole consumer? Does that incentivize moving production even further away from the U.S.?
John Norris (07:51): Like what Apple’s doing in India?
Sam Clement (07:54): Right. Or take Coca-Cola—they’re a global brand. Maybe it makes more sense to set up production in Europe and sell to Africa and Asia from there.
John Norris (08:11): That’s a fair point. I think the message these tariffs send is that the U.S. is unpredictable. And that undermines this administration’s reputation as a unifier or a stable partner. If I were in Europe or Asia, I’d think: “We have to deal with them for a few more years, but we’re digging in our heels.”
(09:37): I think Xi Jinping did a good job of holding his ground. The U.S. dropped from 145% to 30% without any concessions. So why would China do anything now? They’ll just wait us out. And the rest of the world is watching.
Sam Clement (10:12): I agree. But this is also a function of the four-year political cycle. This isn’t a long-term national strategy. It’s being challenged in court. The policies might not last.
John Norris (10:53): I think my parking spot’s being challenged in court too.
Sam Clement (10:55): Judged in Wisconsin.
John Norris (10:56): Something like that.
Sam Clement (11:01): But the key point is: China’s policies aren’t changing. So we have to learn how to operate within those rules.
John Norris (11:12): Right. Xi’s not going to upset his own apple cart.
Sam Clement (11:26): So we’re just stuck riding this out for the next 9 to 12 months.
John Norris (11:34): And in that time, we’ve seen little actual success in bringing manufacturing back. Maybe there’s some additional tax revenue for Washington—but not enough to move production. And enough to slightly ding earnings and increase prices.
Sam Clement (12:14): If we settle at a 10% tariff average, it’s effectively a federal sales tax. That’s how I see it. Like a value-added tax.
John Norris (12:48): You and I know how tariffs work. I’m not sure everyone in Washington does.
Sam Clement (12:52): So how is that not just a VAT? Europe and Canada have them.
John Norris (13:08): You’re being too logical. The word “tariff” carries a protectionist tone—that’s what the administration wanted: America First. The message was punishment, not revenue.
(13:52): Another concern is timing. The consumer is already weakening—savings rates are down. If we added a federal sales tax, people would say, “not the time.”
John Norris (14:20): Not the time.
Sam Clement (14:21): Exactly. Even if you agree with the policy, now isn’t the time.
John Norris (14:34): And sentiment was already shaky before April 2. Not collapsing—but wobbling. When we say “slowdown,” people think 2008. But we’re talking about the consumer growing at 1%. That could flatten GDP.
(15:31): Since April 2, consumer sentiment hasn’t just wobbled—it’s collapsed. Business confidence, too. So we’ll see some weird data in May and June—especially since early-month data is extrapolated for the whole month. For example, April’s jobs report showed 177,000 new jobs, but that was based on activity before April 12. The second half of the month? We have no clue.
Sam Clement (16:26): We assume it was the same.
John Norris (16:28): But what if it wasn’t? May and June data might surprise people. Durable goods, labor numbers—it’s going to be messy. People thinking, “the worst is over,” because we reduced Chinese tariffs haven’t really thought it through.
(16:44): First-quarter GDP was weak. Second quarter might be worse. Airlines are saying demand is soft. Fewer international visitors. That’s real money. The economy is slowing—tariffs or not.
Sam Clement (17:25): And student loans are back on. All kinds of factors are in play.
John Norris (17:32): Yes, timing matters. Slapping on a sales tax when inflation has already eaten away at consumers? Not ideal.
Sam Clement (17:54): Exactly. And we’re seeing it in the data. Car loans over $500, $1,000, even $1,500 a month. Most are now 84-month terms.
John Norris (18:10): Seven years!
Sam Clement (18:24): That didn’t used to happen. It shows how affordability has changed. Delinquencies are ticking up. Student loans weren’t “not” delinquent—they were just on pause. Now we’re seeing the truth.
John Norris (19:14): It’s not 2008. But it’s visible in the data now. It’s not just a Rorschach test.
Sam Clement (19:29): We don’t have to paint the mosaic anymore—it’s showing up on its own.
John Norris (19:50): We were going to see a slowdown anyway. Tariffs just made it worse. And maybe the market has gotten ahead of itself. A 30% tariff is still a cost.
(19:54): Alright, time for our disclaimer: Any opinions expressed here are ours—mine and Sam’s—and not necessarily those of Oakworth Capital Bank or its affiliates. This podcast is for informational purposes only. Nothing said here is an offer to buy or sell securities or investment services. Opinions are subject to change without notice, and markets fluctuate.
(20:41): If you enjoyed this episode, please drop us a line. We’d love to hear from you. You can email us at or leave a review on your podcast platform of choice. To access more content, visit oakworth.com, click on the Thought Leadership tab, and explore previous Trading Perspectives episodes, our blog Common Cents, quarterly publications like Macro Market, and other insights from our advisory team.
Sam, anything else?
Sam Clement: That’s all I’ve got.
John Norris: That’s all I’ve got, too. Y’all take care.