Introduction
Greetings, NIRVC family of customers and friends.
You probably noticed we had one of those months where decades seemed to happen in April. Fast-moving events are very difficult to cover in a video. Anything I said during filming in April could have been rendered laughably wrong by the time it went through editing and you had the opportunity to watch it.
However, there are some things we know with relatively high confidence, and that’s where I want to focus this discussion.
Financial markets seemingly became all about tariffs and the stock market all of the time. Not surprisingly, after two back-to-back customer appreciation reunions during the weeks of April 7th and April 14th, tariffs and the stock market were the overwhelming topics our customers wanted to discuss.
Now, juggling all of this is complicated, to say the least, so consider yourself warned—this is not going to be a short video. Fortunately, there are chapters, so you can break your viewing boredom into shorter segments according to your tolerance for monotony.
I’ll do my best to cut through some of the fog in this edition of The World According to Brett.
I’m certain many—if not most—within the sound of my voice will disagree with or even be offended by some of my thoughts. Please know that when it comes to business and the economy, I always endeavor to remain unemotional and politically agnostic. Approaching business or the economy through emotional or political views is a fool’s errand that almost always ends badly.
This video is not intended to be political commentary.
Given what we already know about our economy and how it has behaved for decades, wouldn’t it behoove us to try to look ahead at what could happen—whether good or bad—if the Trump administration is able to execute on some, part, or all of its agenda?
As President and CEO of National Indoor RV Centers, it is my responsibility to look out over the dashboard, anticipate what may be coming, and position NIRVC to navigate whatever ups and downs the economy may bring.
In keeping with our tradition, this video will contain a great deal of data because, as I’ve often said, an opinion without data is simply another opinion.
So let’s collectively hold our noses and jump into what the facts and the data are telling us.
Trade Deficits in Absolute Dollars
Personally, I believe a U.S. trade deficit is neither inherently good nor bad. Clearly, too large of a deficit is problematic, but a trade surplus could also create significant problems—perhaps even worse ones.
As I’ll explain in a few minutes, I believe it’s important for the United States, or any country for that matter, to maintain a degree of self-sufficiency and support its own workers and manufacturers. However, some segments of our economy are far more important than others and require different approaches. Tariffs may or may not be the answer in certain sectors, while in others they may be the only practical solution.
As with every solution, there are tradeoffs.
The United States buys far more goods and services from the rest of the world than the rest of the world purchases from us. That difference is known as the trade deficit. As this chart illustrates, we’ve run trade deficits almost every year since the 1970s.
The trade deficit tends to shrink somewhat during recessions when consumer spending declines, but we have not experienced a meaningful trade surplus in many decades.
That does not mean U.S. exports are declining. In fact, they have grown substantially.
Looking specifically at goods, the blue bars represent U.S. exports, the black bars represent imports, and the red line reflects the goods trade deficit.
However, when we look at services instead of physical goods, the story changes. The United States exports more services than it imports. American companies excel at producing non-tangible products such as software, movies, television, music, and a wide variety of business services. The rest of the world wants these products and purchases them from us.
That said, while valuable, these industries are generally not critical to a nation’s long-term survival or supply chain resilience.
When both goods and services are combined, however, the United States still runs an overall trade deficit because imports have grown faster than exports.
In 2024, the United States exported $3.19 trillion in goods and services while importing $4.11 trillion, resulting in a record trade deficit of $920 billion.
That deficit increased by $133.5 billion, or 17%, over the prior year.
For perspective, the United States is the world’s largest importer of goods and services and runs the largest trade deficit by a wide margin. Our deficit is approximately 5.4 times larger than Mexico’s, the second-largest deficit at $172 billion.
In fact, the United States’ trade deficit exceeds the combined trade deficits of countries ranked second through tenth.
By comparison, China exported $3.575 trillion in 2024—about $385 billion, or 12%, more than the United States. China imported $2.587 trillion, resulting in a trade surplus of $988 billion.
Yes, China’s trade surplus was actually larger than America’s trade deficit.
The difference between China’s surplus and the U.S. deficit amounted to an eye-popping $1.91 trillion in 2024 alone.
Collectively, the 25 countries with the world’s largest trade surpluses generated approximately $3.06 trillion in surplus during 2024, and roughly 30% of that surplus came directly from trade with the United States.
GDP as a Percentage of Debt
Now that we’ve discussed the trade deficit in absolute dollars, let’s look at what really matters most.
Just like in our own lives, what we owe is only part of the equation. The other part is our income. Someone earning a million dollars a year can obviously afford more debt than someone earning $100,000 a year.
The same principle applies to countries.
Let’s look at the United States’ total debt relative to its Gross Domestic Product, or GDP.
Currently, the United States has $36.2 trillion in debt and generated $29.2 trillion of GDP during 2024. That means our debt equals 124% of our GDP.
When compared globally, the United States ranks 10th among the fifteen countries whose national debt exceeds their annual GDP.
However, I suspect none of us envy the nine countries whose debt-to-GDP ratios are even higher than ours. In fact, I doubt many of us envy the countries on this list with lower debt-to-GDP ratios either.
When it comes to debt as a percentage of GDP, the United States is simply not in good company.
The Dollar Becomes the World’s Reserve Currency
The U.S. dollar became the world’s reserve currency in 1944 during the Bretton Woods Conference.
That conference established a new international monetary system in which countries agreed to peg their currencies to the U.S. dollar. At the end of World War II, this arrangement made sense because much of the rest of the world had been economically devastated.
Since 1944, the United States has accumulated approximately $25 trillion in cumulative trade deficits, representing roughly 69% of our nation’s current $36.2 trillion debt.
What Happens if Trade Deficits Are Left Unchecked? Who Will Really Own and Control the United States?
If ever-increasing trade deficits are left unchecked, we can follow them to their logical conclusion.
Our nation will own a tremendous amount of goods purchased from countries around the world using U.S. dollars. Those countries, in turn, will use those dollars to purchase our debt, our real estate, and our businesses.
Eventually, we have to ask an important question:
Who will own and control the United States?
Will American citizens work for companies owned by Americans, or will they increasingly work for companies owned and controlled by foreign countries?
Will our foreign creditors ultimately control more of our supply chain than we do?
How long will those foreign creditors continue selling us their products in exchange for our debt?
Our growing trade deficit is producing trends that should concern all of us.
Foreign Ownership of the U.S. Equity Markets
Consider this statement from the Federal Reserve:
“Foreigners held a record $16.5 trillion in U.S. corporate stocks as of the fourth quarter of 2024, marking a 23.9% year-over-year increase. From 1990 through 2024, foreign holdings of U.S. equities grew at a compounded annual rate of 13.2%. Their share of total U.S. stock market capitalization rose from 9.3% in 2000 to 27.1% in 2024.”
The fact that foreign ownership of U.S. stocks has grown at a compounded annual rate of 13.2% for the past 34 years should be very sobering.
If that growth rate continues, foreign ownership of U.S. businesses would double approximately every five and a half years. That would mean foreigners would own 54% of U.S. stock market capitalization—a controlling interest.
We’re seeing similar trends in both our real estate and bond markets.
Again, if left unchecked, persistent U.S. trade deficits are gradually transferring both ownership and control of our country to other nations in exchange for the goods we consume.
And all of this is happening without a single shot ever being fired.
The Non-Hostile Takeover of the United States
Here’s some food for thought.
China has fought only one war since 1979—the Sino-Vietnamese War. The conflict lasted about one month. While it involved approximately 200,000 soldiers and significant military equipment, its brief duration and limited scope kept its overall cost relatively low compared to prolonged conflicts.
By contrast, since 1979, the United States has been involved in 11 major conflicts, costing approximately $4.23 trillion.
Can you spot the difference in strategy between the United States and China?
Eventually, history will determine which strategy produced the better financial return—though certainly not the better outcome in terms of human lives.
Critical Segments of the United States’ Supply Chain
Personally, I don’t care whether we depend on Bangladesh for T-shirts, Vietnam for sneakers, or China for inexpensive toys.
What does concern me is who supplies our:
- Pharmaceuticals
- Semiconductor chips
- Energy
- Ships
- Steel
- Rare earth minerals
…and many other critical components of our nation’s supply chain.
Those are industries that matter strategically and deserve a very different discussion than low-cost consumer goods.
Why Trade Surpluses Could Be More Problematic Than Deficits
Earlier I mentioned that trade surpluses could actually be more problematic than trade deficits. Let me explain why.
At its simplest, the process works like this:
We buy goods from foreign countries and pay them with U.S. dollars.
We also sell goods and services overseas, and dollars flow back to us.
But that flow of dollars never stops. The speed and direction of those flows influence currency exchange rates, which is why trade policy and currency values are so closely connected.
To understand trade, we first have to understand money.
Money is the world’s most liquid asset. It’s the medium of exchange that allows us to buy goods and services. Without it, we’d be forced into some form of barter system.
While most sovereign nations issue their own currencies, it’s common throughout history for one currency to dominate global commerce. Since 1944, that currency has been the U.S. dollar.
Central banks around the world hold dollars in reserve, and most international transactions are settled in dollars. As a result, the non-U.S. world requires an enormous and continual supply of dollars.
Those dollars are the grease that keeps the global economy moving.
Because the world demands dollars, the United States must continually export more of them. That demand strengthens the dollar, making imports cheaper for Americans while simultaneously making U.S. exports more expensive overseas.
This phenomenon has often been referred to as America’s “exorbitant privilege.”
In some ways, however, it’s also a burden.
For example, Americans are incentivized to save less and spend more on imported goods.
Consider this statistic.
As of March 2025, the U.S. personal savings rate was just 3.9% of disposable income.
Care to guess what it was in China?
44.3%.
Chinese households save at a rate more than 11 times higher than Americans.
Because we enjoy the unique privilege of issuing the world’s reserve currency, I don’t believe our goal should be to bring back every low-paying manufacturing job that can be done more efficiently elsewhere.
Instead, we should continue moving up the productivity and income ladder while exploiting our true competitive advantages.
Singapore provides an excellent example.
In 1959, Singapore’s economy largely consisted of producing T-shirts and assembling inexpensive consumer goods.
Today, Singapore has moved far up the manufacturing value chain and has become a global financial center, a trading powerhouse, and a producer of sophisticated, high-value exports.
The same transformation can be seen in countries such as China, Taiwan, and South Korea.
The question, then, becomes:
What are the unique advantages that come with issuing the world’s reserve currency, and shouldn’t we be working as hard as possible to maximize them?
What Are the “Exorbitant Privileges” and Comparative Advantages of Being the World’s Reserve Currency?
As the issuer of the world’s reserve currency, it’s important to understand that global trade is not a zero-sum game.
If you’re a country that does not issue the world’s reserve currency—perhaps a Latin American nation or one of the many countries that make up the other 90% of the world—you generally must keep your trade balanced. Otherwise, your currency will weaken, reducing your citizens’ purchasing power and creating inflation.
The United States enjoys several significant advantages because the dollar serves as the world’s reserve currency.
Lower borrowing costs. The United States can borrow money at lower interest rates because there is tremendous global demand for dollar-denominated assets.
The ability to run trade deficits. The U.S. can sustain larger trade deficits without triggering a balance-of-payments crisis because imports are purchased using its own currency.
Currency stability. The dollar’s reserve status provides stability and liquidity throughout the global financial system.
Economic influence. The United States enjoys greater influence over international financial markets and global economic policy.
It is a mathematical certainty that the world’s reserve currency must run trade deficits. Our trade deficit is, in many ways, simply the side effect of issuing the currency the rest of the world depends upon.
If the United States somehow began running persistent trade surpluses, the rest of the world would eventually become starved for dollars. One consequence would be a dramatically stronger dollar, making American exports prohibitively expensive for foreign buyers.
That would not be good for American manufacturers or American workers.
Even more importantly, if those surpluses persisted, another country’s currency would eventually assume the role of the world’s reserve currency—and with it, inherit all of the advantages that currently belong to the United States.
The Dollar Is the United States’ Top Export
It’s helpful to think about this a different way.
The United States imports goods and exports an equal amount of dollars.
In that sense, dollars are our country’s number one export.
We can create dollars relatively inexpensively and exchange them for valuable goods and services produced around the world under highly favorable terms.
However, this short-term advantage can also create long-term imbalances.
The monetary system that keeps global trade flowing also makes the United States a permanent debtor nation while encouraging excess savings in other countries.
Those opposing forces become larger over time if left unchecked.
Because we possess the extraordinary privilege of issuing the world’s reserve currency, we should do everything possible to preserve that privilege.
Acting Responsibly Irresponsible
To preserve the dollar’s reserve currency status, the United States must do something that initially sounds contradictory.
We must act responsibly irresponsible.
The United States must continue injecting dollars into global markets in meaningful quantities. In practical terms, that means we are required to run trade deficits.
If we stopped running trade deficits altogether, we would eventually lose our status as the world’s reserve currency.
That’s not politics.
That’s simply mathematics.
For that reason, I don’t believe broad-based tariffs are the ideal long-term solution either. As I’ve explained, persistent U.S. trade surpluses could undermine the dollar-based global trading system. Where that ultimately leads is impossible to know, but it is unlikely to produce positive outcomes.
This illustrates the dilemma.
We want the benefits of free-flowing international trade, but we also want to protect American workers, manufacturers, and critical industries from unfair foreign competition.
In many ways, we’re trying to have our cake and eat it too.
So what does “acting responsibly irresponsible” actually look like?
How narrow is the path between growing our economy while maintaining the trade deficits necessary to preserve the dollar’s reserve currency status?
Economic theory suggests that trade deficits should grow no faster than GDP itself. Maintaining that balance allows the country to sustain its debt while preserving long-term economic stability.
If trade deficits grow faster than GDP, borrowing costs rise and economic instability increases.
Conversely, if trade deficits grow too slowly—or disappear altogether—we risk moving toward trade surpluses and eventually losing the unique advantages that come with issuing the world’s reserve currency.
Unfortunately, the data suggests the United States has failed to walk this tightrope.
From 2000 through 2024, U.S. GDP grew at a compounded annual rate of 2.1%, while the trade deficit grew at 6.1% annually.
In other words, our trade deficits have been growing almost three times faster than our economy.
Whenever something appears unsustainable, it’s usually a good indication that it is.
With that groundwork established, I’d now like to turn our attention to tariffs.
I want to divide that discussion into three parts.
First, we’ll examine the historical impact of tariffs.
Second, I’ll share my thoughts on the Trump administration’s negotiating strategy with our trading partners.
Finally, we’ll apply actual numbers to stress-test both the best-case and worst-case scenarios.
The Historical Impact of Tariffs Across 203 Years
Before discussing current policy, I want to begin with history.
I’d like to examine the historical impact of tariffs, then share my thoughts on the Trump administration’s approach to negotiations, and finally stress-test both best-case and worst-case scenarios using actual numbers.
The chart we’re looking at compares major historical trade policy events—both protectionist and free-trade initiatives—and measures how key economic indicators changed during the first three years after each policy was implemented.
The data tracks changes in:
- Average tariff rates
- Trade balance as a percentage of GDP
- Real GDP growth
- Equity market performance
- Inflation
I chose a three-year window because it best reflects the time horizon most relevant to investors and captures the initial economic effects after a policy takes effect.
Looking across 203 years of history, tariff periods really don’t appear dramatically different from the overall averages.
One could argue that stock market returns were modestly lower and inflation slightly higher during tariff periods, but the differences are relatively small given the long time frame being examined.
The broader conclusion is straightforward:
Over more than two centuries, tariffs have not proven to be an economic game changer.
The Current Administration’s Approach to Negotiations with Our Trading Partners
This brings us to the obvious question:
What is the Trump administration actually trying to accomplish with its broad-based global tariffs?
Before I answer that, I feel obligated to make one disclosure.
I spend very little time—if any—reading or listening to what is commonly referred to as the mainstream media.
The overwhelming majority of my information comes from a wide variety of paid research subscriptions because, in my experience, information is often worth what you pay for it—especially when it comes to high-quality research and reliable data.
I’ve always valued data produced by organizations that have earned my trust over decades.
With that disclosure out of the way, I’ll state unequivocally that I have neither read nor heard anything coming directly from President Trump’s cabinet suggesting they are attempting to create trade surpluses through tariffs or intentionally jeopardize the U.S. dollar’s status as the world’s reserve currency.
Instead, they have consistently spoken about correcting trade imbalances while encouraging the reshoring of certain manufacturing sectors that are critical to the long-term stability of our nation’s supply chain.
Personally, I believe their objective is to bring the growth rate of our GDP and the growth rate of our trade deficits back into alignment.
The administration would like to increase long-term GDP growth to approximately 3% by reshoring industries such as:
- Pharmaceuticals
- Semiconductor manufacturing
- Energy
- Shipbuilding
- Other strategically important sectors of our economy
If GDP growth increases to 3%, the growth rate of our trade deficit naturally becomes smaller by comparison.
We’re not talking about earth-shattering numbers here, nor anything close to the emotional reaction we witnessed in the financial markets during April.
Let’s put some real numbers behind the concept.
The U.S. economy produced $29.2 trillion of GDP in 2024.
Growing that economy by 3% would add approximately $876 billion of additional GDP annually.
Since the current trade deficit is roughly $920 billion, bringing it down by only $44 billion—or about 4.8%—would result in both GDP and the trade deficit growing at approximately the same 3% annual rate.
According to the administration, commitments have already been secured for more than $8 trillion in new capital investment across technology, manufacturing, infrastructure, and other industries.
If those commitments materialize—even over four years—that represents roughly $2 trillion per year, which is approximately 45 times larger than the $44 billion adjustment needed to achieve parity between GDP growth and trade deficit growth.
Yes, I recognize that building a semiconductor fabrication facility in the United States currently takes approximately 38 months.
However, GDP begins increasing the moment construction starts.
As money is spent on engineers, architects, contractors, steel, concrete, equipment, and construction workers, economic activity expands immediately.
Then, once the facility is complete, the temporary construction jobs transition into permanent manufacturing jobs.
Trade deficits have been a challenge for every administration since 1944, regardless of political party.
Since 1944, Fifteen Administrations Have Tried to Address Trade Deficits
Every administration since 1944 has attempted to deal with America’s trade deficits in one form or another.
Each has approached the problem differently.
I’ve always believed that excessively large trade deficits are a legitimate concern.
To my knowledge, however, no country with which we run large trade deficits—or to which we provide significant military protection—has ever voluntarily come forward and offered to renegotiate trade agreements on terms that are more favorable to the United States.
It simply hasn’t happened.
In my view, the Trump administration is simply the latest administration attempting to solve a problem that has challenged every president since World War II.
Why Did the President Implement Broad-Based Tariffs Across the Globe?
So why do I believe President Trump implemented broad-based tariffs around the world?
I’m not offering an opinion on whether the approach is right or wrong. Rather, let me answer the question this way.
During the years I owned banks, every loan committee meeting began with the same principle:
If a borrower owes us $50,000 and can’t repay us, he has a problem. If he owes us $50 million and can’t repay us, we have a very big problem.
The United States today is both the largest borrower and the largest consumer on the planet.
Total sovereign debt around the world is approximately $98 trillion, and the United States accounts for $36.2 trillion of that total—roughly 37%.
Global personal consumption reached approximately $60 trillion in 2024. Of that, U.S. consumers accounted for $17.5 trillion, or roughly 29% of everything purchased worldwide.
I can assure you that during my banking career, we never had 37% of our loan portfolio concentrated in a single borrower. No bank would ever allow that level of concentration, and banking regulations certainly wouldn’t permit it.
So when the country that represents 37% of the world’s sovereign debt and nearly 30% of global consumer spending decides it’s no longer willing to continue business as usual, the rest of the world suddenly has a very big problem.
A problem significant enough that our trading partners around the globe are eager to come to the negotiating table.
Will President Trump ultimately negotiate better trading terms than the United States currently has?
Remember, this discussion is not solely about tariffs.
The threat of tariffs is what is bringing countries to the negotiating table.
For example:
- Will other nations reimburse the United States for part of the defense we provide instead of paying tariffs?
- Will they reduce or eliminate their own tariffs in exchange for the United States doing the same?
- Will they invest capital in the United States to help reshore critical industries within our supply chain?
During President Trump’s first term, we saw examples of all three.
Given that his administration has already announced more than $8 trillion in investment commitments and negotiated an agreement with Ukraine involving access to rare earth minerals and shared profits, I would say the early indications suggest this heavy-handed negotiating strategy is producing results.
Whether it ultimately succeeds, however, only time will tell.
Stress Testing the Best-Case and Worst-Case Scenarios
What happens if the President’s negotiations ultimately fail?
What if our trading terms don’t improve at all?
After all, there have been 15 administrations since 1944, and none has fully solved the problem of excessive trade deficits.
Statistically speaking, history would suggest President Trump has roughly a 1-in-15 chance, or about a 6.7% probability, of completely solving the problem.
So let’s apply some simple, high-level math to determine whether the markets are overreacting—or whether they might actually have it right.
In 2024, Americans spent $17.5 trillion on personal consumption.
Of that total, approximately $4.11 trillion represented imported goods and services.
In other words, about 23.5% of everything Americans purchased came from outside the United States.
I haven’t attempted to build a detailed spreadsheet accounting for every individual tariff rate, exemption, or product category.
Instead, I’m simply going to use the administration’s 10% across-the-board tariff as shorthand for this exercise.
Applying a 10% tariff to $4.11 trillion of imports would generate approximately $411 billion in tariff revenue during the first year.
That estimate is generally consistent with the administration’s projection of generating roughly $5.2 trillion over the next ten years.
If consumers ultimately absorb that full $411 billion cost, total annual consumption would increase from $17.5 trillion to approximately $17.91 trillion.
Put another way, tariffs would increase consumer prices by roughly 2.3%.
When added to our existing inflation rate, total inflation could potentially reach 4.7%.
I consider that to be the worst-case inflation scenario.
Why?
Because it assumes four things all happen simultaneously:
- President Trump fails to negotiate even a single improvement in our current trade agreements.
- None of the more than $8 trillion in announced foreign investment commitments ever materializes.
- Domestic oil production does not increase enough to reduce energy costs and lower inflation.
- The administration maintains the currently proposed tariff structure without modification.
Personally, I don’t assign a 100% probability to all four of those assumptions occurring at the same time.
Risk of a Recession
That said, I would be remiss if I didn’t discuss what I believe is the greatest risk.
Tariffs increase the cost of imported goods.
From the consumer’s perspective, they function much like a consumption tax because they increase the prices we pay, and that money effectively leaves our economy.
The administration’s stated objective is to make the tax cuts from President Trump’s first term permanent while providing additional tax relief funded by tariff revenue.
In other words, the goal is to return to taxpayers the money tariffs take from their pockets through lower income taxes.
But what happens if Congress doesn’t approve those tax cuts?
If that occurs, Americans would face two simultaneous tax increases:
- The expiration of the first-term tax cuts.
- The additional consumption tax created by tariffs.
Together, those two events would represent one of—if not the largest—tax increases in American history.
If that’s the scenario that ultimately unfolds, I have zero doubt that the United States would enter a recession.
And it would not be a mild one.
Were Tariffs the Cause of April’s Stock Market Correction, or Just the Excuse?
I’d now like to spend a few minutes talking about the stock market because I believe it’s something that’s near and dear to all of our hearts. I know it certainly is to mine.
My primary business, Global Financial Services, is an investment firm, so equities, fixed income, and real estate are always top of mind. Here at National Indoor RV Centers, the single largest driver of demand for motorhome sales is also the stock market. When people feel wealthy, they buy motorhomes. When they don’t—like they didn’t during the month of April—they don’t buy motorhomes.
And like many of you, a significant portion of my retirement is invested in the stock market. It’s the first thing I think about when I wake up in the morning, the last thing I think about before I go to bed, and it’s occupied much of my attention throughout my entire 45-year career.
The point I want to make—and I want to make it very clearly—is this:
Tariffs had nothing to do with the stock market correction in April.
Let me explain by walking you through the actions we took ourselves.
Back in September of 2024, when we were preparing our projections for the 2025 motorhome market, we believed the S&P 500 was approximately 20% overvalued.
As I’ve said in nearly every economic video I’ve produced, we eat our own cooking. If I say something publicly, you can safely assume we’ve already positioned our own capital accordingly.
By the end of 2024, Global Financial Services was holding the highest percentage of cash we’d held since August 2021, just before the market correction that began later that year.
By the first week of February 2025, we believed the S&P 500 had become approximately 25% overvalued. Valuations had reached levels that occur less than 1% of the time.
So, on February 3, 2025, we purchased June put options on the S&P 500 ETF—commonly known as SPY—for $3.90 per share.
At the time, SPY was trading around $617.78, and the VIX, or Volatility Index, stood at 17.21.
The VIX measures market volatility. It doesn’t care whether the market is moving up or down—it simply measures how rapidly prices are moving.
When volatility is low, markets are calm. Fear and excitement are minimal.
When volatility is high, markets are moving rapidly, emotions are elevated, and investors are either fearful or euphoric.
Generally speaking:
- A VIX reading below 20 is considered low.
- A reading above 30 is considered high.
That leads to an old trader’s saying:
When volatility is high, you buy. When volatility is low, you go.
Because we were purchasing put options, we were betting the market would decline. We bought them while the VIX was low, when markets were calm and fear was minimal.
The reverse happened when we sold them.
We had already decided that if SPY declined 20%, we would take our profits.
Although we believed the market was roughly 25% overvalued, we have always preferred to play the game conservatively.
As the old saying goes:
Pigs get fat, but hogs get slaughtered.
We knew that once SPY declined 20%, we would exit our position.
That’s exactly what we did.
On the morning of April 7, 2025, we sold our put options for $28.37 per share, producing a 727% gain.
I walked you through that trade to make one point abundantly clear:
Tariffs did not cause the stock market correction in April.
When the stock market becomes grossly overvalued, it eventually corrects.
Period. End of story.
What we never know ahead of time is which event will become the excuse for the correction.
Professional money managers—including mutual funds, hedge funds, pension managers, and other institutional investors—control approximately 80% of the U.S. stock market.
I’ve never heard a money manager tell clients their portfolios declined because they knowingly bought overvalued stocks.
Remember, when you buy a stock, you’re purchasing ownership in a business. Every day you continue holding that stock, you’ve effectively decided to buy it again at its current price because you still believe it’s a good value.
If a manager doesn’t truly understand the value of the businesses they own, it’s inevitable they’ll eventually own overvalued stocks when a correction occurs.
And admitting that mistake isn’t exactly good for client retention.
That’s why virtually every stock market correction in history eventually gets blamed on something else.
The excuse is never the underlying overvaluation itself.
Tariffs didn’t create the stock market’s overvaluation.
Years of extraordinary monetary stimulus, massive fiscal spending, and inflation created the overvaluation.
When we purchased our put options on February 3, no tariffs had even been announced.
President Trump didn’t announce his tariff plan until April 2.
In fact, for many American businesses, tariffs should actually have increased profitability—assuming those businesses weren’t already significantly overvalued.
That probably sounds backwards, so let me explain.
Businesses Are Tax Collectors
Businesses are not taxpayers.
Businesses are tax collectors.
Every tax ever imposed on a business ultimately becomes part of that company’s cost of doing business and is passed along to consumers through higher prices.
No business says:
“We’ll simply reduce our profit margins and accept lower returns for our shareholders.”
That doesn’t happen.
Politicians often prefer taxing businesses because it’s largely a hidden tax.
Consumers still pay it—but indirectly through the prices they pay for goods and services.
Tariffs are simply another form of taxation.
You can think of them as a consumption tax.
Unlike many business taxes, however, tariffs are at least visible.
Yes, consumers will pay higher prices because of tariffs.
Hopefully, those higher costs are offset through lower income taxes.
But I want you to view tariffs through the eyes of a business owner.
Looking at Tariffs Through the Lens of a Business
Let’s look at tariffs from the perspective of a typical American business.
Suppose your company manufactures bottled water here in the United States, and you sell each bottle for $1.00.
Now let’s assume you compete against a bottled water manufacturer in Fiji that also sells its product in the United States for $1.00 per bottle.
If the United States imposes a 25% tariff on bottled water imported from Fiji, your competitor must now sell its product for $1.25 per bottle in the U.S.
How is that bad for your business?
You now have two attractive options.
First, you can keep your price at $1.00 per bottle. Because you’re now significantly less expensive than your foreign competitor, your sales volume is likely to increase. Greater volume translates into greater profits.
Second, you can raise your own price closer to $1.25 per bottle to match your competitor. Your sales volume may remain about the same, but your profit margin per bottle increases substantially.
Either way, your business stands to become more profitable when tariffs are imposed on your foreign competitor.
So why would the value of your company suddenly decline 20% in two days if your future profitability has actually improved?
The only logical conclusion is that your company was already overvalued.
I fully recognize there are certain retailers and businesses that depend heavily on inexpensive imported products, and those companies may indeed be negatively affected by tariffs.
But that’s a very different statement than saying the entire stock market should suddenly lose trillions of dollars in value.
My position has been consistent.
The stock market was already overvalued and due for a correction.
Tariffs neither created that overvaluation nor caused the correction itself.
In fact, tariffs should increase the profitability of many American companies relative to their foreign competitors, which should have supported higher, not lower, business valuations.
Let me present one final example, and then I’ll let you decide for yourself whether tariffs were truly responsible for the April correction—or merely provided a convenient explanation.
Was the Stock Market’s Correction in April an Overreaction?
Before President Trump’s tariff announcement, the total value of the U.S. stock market was approximately $66.77 trillion. That figure includes companies listed on all three major U.S. exchanges.
Using the S&P 500 as a proxy for the overall market—which is appropriate because it is weighted by market capitalization—we saw the index decline from a peak of 6,147 to a low of 4,835, representing a 21.4% correction.
A decline of that magnitude equates to roughly $14.3 trillion in lost market value.
Now compare that to the administration’s estimated first-year tariff revenue of approximately $411 billion.
The idea that the stock market should lose $14.3 trillion in value because of the potential for $411 billion in tariffs strikes me as an extreme overreaction.
In my opinion, it only strengthens the argument that the market was already significantly overvalued and simply experienced a normal correction.
Now, for those of you who are still awake—believe me, I’ve been fighting to stay awake here on camera myself—as I promised at the beginning of this video, let’s finish with what all of this means for the motorhome market.
What Will Be the Impact of Tariffs on Motorhomes?
Thankfully, we’ve seen this movie before.
President Trump imposed tariffs during his first term, which covered the 2018 through 2021 motorhome model years.
Let’s compare what actually happened to motorhome pricing during those four years with what happened during the following four model years, 2022 through 2025.
Because our dealer sales and service agreements prohibit me from sharing actual invoices, I’ll use MSRP figures instead. Fortunately, MSRP produces the same inflation rate as invoice pricing for this comparison.
For consistency, I’ll use the Newmar Dutch Star 4369 on a Freightliner chassis for all eight model years.
Let’s begin by comparing the MSRP of the 2017 model with the 2021 model to capture the full impact of the four model years that included President Trump’s tariffs.
The MSRP of a 2017 Newmar Dutch Star 4369 was $445,397.
By the 2021 model year, that MSRP had increased to $520,212.
That represents a 3.96% compounded annual growth rate in price during President Trump’s first term.
Now let’s compare that with the four full model years under the Biden administration.
We already know the 2021 MSRP was $520,212.
By the 2025 model year, that same coach carried an MSRP of $740,081.
That equates to a 9.21% compounded annual growth rate.
In other words, motorhome prices increased more than 2⅓ times faster during the Biden administration than they did during the Trump administration.
To me, that’s pretty clear evidence that tariffs were not the root cause of inflation in motorhomes.
Personally, as a motorhome dealer, tariffs are a bit of a yawn.
I’m sure they’ll create some temporary discomfort for manufacturers as they work through supply chain adjustments.
It’ll probably feel a little like standing with one foot in a bucket of ice water and the other in boiling water.
On average, your temperature is fine—but it’s still going to be uncomfortable for a while.
Now let’s shift our attention back to what has always mattered most in this industry:
Supply versus demand.
Supply and Demand Will Continue to Drive the Motorhome Market
When all is said and done, the motorhome market has always been—and will continue to be—driven by one simple economic principle:
Supply and demand.
If demand exceeds supply, prices rise.
If supply exceeds demand, prices fall.
It’s really that simple.
In my opinion, there are four primary factors that will determine where motorhome prices go over the next several years.
1. The Economy
The first factor is the overall health of the economy.
If the economy continues to grow, employment remains strong, and consumers feel confident, demand for motorhomes should remain healthy.
If we experience a recession, demand will naturally soften.
2. The Stock Market
The second factor is the stock market.
Many motorhome buyers have significant portions of their wealth invested in financial markets.
When the stock market performs well, consumers generally feel wealthier and become more comfortable making discretionary purchases like motorhomes.
When markets decline sharply, people tend to postpone major purchases until confidence returns.
3. Interest Rates
The third factor is interest rates.
Motorhomes are frequently financed, so borrowing costs play a meaningful role in affordability.
Lower interest rates generally stimulate demand.
Higher rates tend to reduce affordability and slow purchasing activity.
4. Production Levels
Finally, production levels matter.
If manufacturers produce more coaches than consumers are willing to buy, inventories increase and pricing pressure develops.
If manufacturers reduce production while demand remains healthy, inventories tighten and pricing strengthens.
At the end of the day, those four factors—economic growth, stock market performance, interest rates, and production—will have a far greater influence on motorhome pricing than tariffs ever will.
My Outlook for the Motorhome Market
Based on everything we’ve discussed, here’s my outlook.
I don’t believe tariffs, by themselves, fundamentally change the long-term outlook for the motorhome industry.
Yes, they’ll likely create some short-term uncertainty.
Yes, they may temporarily disrupt portions of the supply chain.
And yes, manufacturers may experience higher costs on certain components while the market adjusts.
But those are temporary issues.
The long-term direction of the industry will continue to depend on supply and demand, the broader economy, interest rates, consumer confidence, and the health of the stock market.
If those factors remain supportive, I believe the motorhome market will continue to perform well over time.
If they weaken, the industry will face headwinds regardless of tariff policy.
That’s why I believe investors—and motorhome buyers alike—should focus on the underlying fundamentals rather than becoming overly distracted by daily headlines.
Final Thoughts
I hope this discussion has helped put recent events into perspective.
My objective has never been to convince anyone to agree with my opinions.
Instead, it’s to encourage people to think critically, study the data for themselves, and avoid making emotional decisions based on headlines or political narratives.
As always, I’ll continue sharing my thoughts as new information becomes available, and if the data changes, I’ll happily change my opinion as well.
Thank you for spending your time with me today.
I truly appreciate your support, and I look forward to seeing you again in the next video.