Money Monday: Explaining tariffs and their potential investment impact

It’s Money Monday, and financial expert Paul Hood joined News On 6 to discuss how potential tariffs could impact everyday consumers—and whether investors could use them to their advantage.

Tariffs as a Negotiation Tool

With tariffs back in the headlines, Hood explained that former President Donald Trump often uses tariffs as a negotiation tactic rather than a definitive policy move.

"Trump uses tariffs in a negotiation," Hood said. "So when you're negotiating with somebody, typically you want to set an extreme anchor. If you've got to show your cards first, you want to do an extreme anchor. So what he's using is this as a shock feature. They're going, ‘Holy, this man is nuts.’”

Hood suggested that while the tariffs could lead to higher prices on everyday goods like groceries, their long-term economic impact remains uncertain.

How Tariffs Could Affect Investments

Hood cautioned against making rash investment decisions based on tariffs alone, emphasizing the importance of a long-term strategy.

"We've got to be careful giving blanket investment advice because your investment should be a strategy, a plan—not necessarily trying to use fear or greed," he said.

However, he noted that tariffs are designed to promote American-made products, which could make U.S. equities (stocks) more attractive.

"One of the best inflation fighters is buying equities," Hood explained. "And since [tariffs are] designed to help U.S. companies, U.S. equities by definition [could benefit]."

Still, he advised caution: "If you shouldn't be buying equities anyway, then don't buy stock and stay with bonds. But if you're in the stock business, typically, to combat that would be buying U.S. stocks."

Uncertainty Around Implementation

With tariffs potentially taking effect next month, Hood acknowledged that there’s still uncertainty about whether they’ll actually be enforced.

"Some people are saying I'll be surprised if they go in. Now, Canada's fighting, so it may. Mexico seems to be, you know, submitting a little bit," he said.

For now, he recommends keeping an eye on the situation but avoiding impulsive financial moves.

Stay Informed

As trade policies continue to evolve, financial experts like Hood emphasize the importance of staying informed and strategic with investments.