Welcome back to Stacking Equity, where we break down the major financial news and tech trends with less spin than a LeBron playoff elimination interview and more authenticity than Katy Perry's space mission.

Tariffs - History, Hype and the Real Impact

Let's talk tariffs - because everything in finance is cyclical, much like Marvel reboots or wide-leg jeans (speaking of which, JNCOs are back!)

A Bit of Background

As mentioned, using tariffs is nothing new. They are as old as international trade itself. They are among the few impactful arrows in a government's fiscal policy quiver. In U.S. history, we have seen them enforced several times, but not since William' The Tariff King' McKinley have we seen anything this dramatic.

To begin making sense of everything, it's essential to provide a quick rundown on how we got to our current balance of trade (simply the net of imports minus exports). While trade policies were a hot topic in the 1920s, it was really post-WWII that set the trail for where we are today. After the war, the U.S. played global economic quarterback. We let Europe and other foreign countries put tariffs on our exports to help them rebuild and recover. The under-the-radar benefit was that the dollar became the world's default currency, helping cement America's spot as the world's financial superpower. It led to the U.S. dollar being the premier currency for government reserves, and numerous countries pegged (read: closely linked) their national currency directly to ours.

The Trump Tariffs – The Facts (And the Fuss)

Fast-forward to today, and tariffs are back in a YUGE way, as Donnie Dollars began rolling out new rounds of Tariffs at breakneck speed. The stated goal? Bring manufacturing home.

Before going any further, I want to be very clear: I am not here to discuss whether bringing manufacturing jobs back is good for the country. That is a debate you can have with your Uncle Frank at this year's Thanksgiving dinner table.

I will provide some of the facts, though:

• The 'reciprocal' tariffs proposed initially were based on some seriously oversimplified math. They didn't reflect a one-for-one match as the administration was attempting to sell us all on.
• Effectively transitioning manufacturing back from overseas requires significant time and investment by companies. That isn't an opinion - there is no way to shortcut it.
• Consumers must be willing to pay more for goods. U.S. labor laws will guarantee that companies' costs to make products will increase, and let's be real, those costs will be passed down to us as the end-users.
• Finally, we need to recognize that stating the argument for bringing manufacturing back is far too broad and has the general public ignoring the nuance that likely holds the solution – how do we strategically identify the areas of manufacturing that make sense to bring back, and what is fine to leave across the pond?

The Real Implementation Issue

Now, I openly admit I don't want to, nor do I feel well-equipped enough to discuss the long-term merits of bringing back the glory days of 'American Made.'

However, I am confident enough to state that the manner in which tariffs are being rolled out is about as useful to the stated goal as a 'Do Not Post' memo sent to Kanye by his PR team.

The inarguable issue is that the size, timing, and amount of flip-flopping on the tariffs will not only cause us to miss the stated goal but also cause the market to drop faster than Netflix's viewership after the password crackdown. The impact is why every business CEO is raising warning flags, and every bank is increasing the likelihood of a recession.

When tariffs hit overnight, volatility spikes. CEOs freeze, investments stall, and markets get jumpy. If you want to implement change - fine. But let businesses adapt by giving them time and a clear runway, not by giving them a surprise pop quiz.

For investors, the current policies mean bigger market swings and more uncertainty. The best approach? Focus on the long game, not the headlines.

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OpenAI Continues Its March to Reign Over Tech

If the last decade-plus in tech was Game of Thrones, the big players - Google, Meta, Apple, Amazon - were so busy fighting each other for (market) supremacy that they completely missed OpenAI storming the North Wall. Well now, it seems like OpenAI is finally ready to unleash its version of the ice dragon. Scam Altman and squad launched their new image generator API this past week, which sent Adobe and Figma scrambling. Then, they followed it up by setting their sights on taking down Google Search with shopping integrations.

The Importance: 🥱 I get it. You've heard me say it here before - AI isn't just the future; it's the now.

However, this is the first time we're seeing a real, practical path to disruption outside engineering and process management. E-commerce, advertising, and design have officially entered the blast zone. Having some job security anxiety is reasonable as more serious use cases are announced, but remember that niche expertise plus AI is a launchpad, not a pink slip. The chaos is real, but so is the opportunity. The ability to parlay its use into side gigs, consulting, or even launching your own thing has never been more accessible.

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Trump's Millionaire Tax: A Potential Political Twist?

Never a dull moment when it comes to Trump headlines. In a recent interview, he stated that he loves raising taxes for the rich by increasing the top income tax bracket from 37% to 40%. This isn't his first time testing those waters either - he pitched a similar take back in 1999.

Now, if he actually were to push this through, it would make a good dent in that little $36 trillion national debt crisis that traditional conservatives love to spotlight. But what really makes this noteworthy would be how it would have the political landscape flipping and reversing like Missy Elliott circa 2002. Imagine Republicans having their guy go against one of the party's foundational mainstays and Democrats' heads exploding as they share the same side of an argument as their decade-long nemesis. Cue the dog in a burning room meme.

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The Importance: I'll be honest, the odds of this happening are lower than my mom figuring out how to use a Crypto wallet (she can't even understand Bluetooth headphones). But the thought of the spectacle is too good not to at least share this great 'what if' scenario.

So, if you're a high earner or holder of significant stock options, there is no need to start rushing to make your Roth conversions (however, check out our latest post if a Roth Conversion does make sense). However, it is worth keeping on the peripherals.

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Ray Dalio's The Changing World Order paints a compelling picture of the U.S. losing its grip as the world's economic leader, with China waiting in the wings. Is it overblown? Maybe, but maybe not.

Here's the crux: China's real advantage isn't just rapid growth – it's their manufacturing capacity, resource control, and sheer ability to scale. In our current status, one-on-one, the U.S. can't match China's output, and even our military edge is narrowing. History shows that even the most innovative nations (think: Great Britain's Industrial Revolution) can lose dominance when facing a rival with greater scale and the ability to absorb and replicate new technology. If America turns inward and goes it alone, it risks being outmatched.

The good news? There's a path to success by leveraging the scale of our alliances to help us move forward. Only by working with partners can the U.S. maintain the collective weight needed to counter China's ambitions because scale, not just innovation, will decide who leads the next era. It is also worth noting that China faces internal headwinds, from real estate instability to lower household wealth. Still, these haven't blunted its global manufacturing leverage.

However, recent moves by the market to diversify away from the dollar and the fact that investors' usual 'flight to safety' toward U.S. treasuries didn't occur with the last market dip are concerning. This shift is both a symptom and a signal of changing global confidence in U.S. leadership.

Takeaway: Don't rush to trade your dollars for gold bars or Bitcoin just yet. The U.S. dollar is still king, but the world is watching - and so should you. How American leadership handles the next decade will shape whether the world order becomes Dalio's China chapter or merely a slight plot twist in the global power cycle.

-1- Tax Review Season

Filing your taxes is only half the battle. Reviewing your return is where the real planning happens - spotting missed withholdings, fixing surprises, and optimizing your strategy for next year.

The goal of tax planning should be to dial in your estimated tax withholdings to get as close to equal as possible to the amount Unc Sam charges you come April.

• Owed in 2024 - Your withholdings were too low, or you could have benefited from estimated quarterly payments. We may not always be able to reduce the bill, but we can limit the surprise.
• 2024 Refund – It seems great having a fat check hit your account, but the reality is that you gave the government a free loan on that money for the year. The issue is that you're likely withholding too much and need to make adjustments.

Things to Consider:

• Check your equity withholdings: RSUs and stock options are often taxed differently than salary (typically at lower amounts).
• Review bonus/commission withholdings: Supplemental income (read: non-salary) is often withheld at a flat rate - it's essential to review your company's approach.
• Quarterly payments if needed: If you have significant non-salary income before Q4, set up estimated payments to avoid penalties.

-2- Quick Hits

• College savings Check-In: May's a great time to revisit 529 contributions if you have kids.
• HSA/FSA Review: Mid-year is perfect for checking your health account balances and spending - especially for FSAs. It's true what they say - if you don't use it, you lose it.

That's a wrap for May. If you made it this far, you officially have more staying power than my bracket during March Madness.

Have comments or questions? Just reply to this email -I read every note.

Until next time, keep stackin'.

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