Tariffs, Power Plays, and the Long Game: A Rational Investor’s Take on the Global Chessboard
- Bahram Assadollahzadeh
- Apr 16
- 3 min read
Tariffs are dominating headlines, but what do they actually mean for businesses, why are they rising and how can investors protect themselves and use tariffs to their advantage to get ahead?
How Tariffs Impact the Economy
Tariffs act as taxes, raise prices of imported goods for consumers and generate government revenue. They may protect domestic industries short-term but can lead to less choice, higher inflation and interest rates and a slowing economy. Worse still, tariffs foster complacency. When domestic companies are shielded from foreign competition, they lose the urgency to innovate and risk becoming less competitive over time.
Retaliation only worsens the situation for everyone — just like shooting more holes in a boat just because the other person in the boat started shooting holes.
A Smarter Approach: Global Capitalism
Instead of tariffs, nations should embrace global trade to maximize economic growth and create the wealth necessary to help workers adapt to the demands of a changing economy with subsidies and upskilling.
Why Are Tariffs Rising Despite Their Drawbacks?
If tariffs are detrimental in the long run, why are countries increasingly resorting to them? Because global power dynamics are shifting - and when that happens, tension is inevitable.
The United States remains the dominant economic and geopolitical power but faces growing competition from other nations. Historically, when a leading power begins to lose its relative edge, even slightly, anxiety grows-particularly among those who feel left behind by globalization. Individuals with access to education, capital, and global networks continue to benefit from emerging economies, but those without these advantages often bear the brunt of global competition. As living standards are threatened, frustration turns outward-toward foreign nations and trade.
Policy decisions reflect this tension. The U.S., with its immense strategic advantages, often uses its leverage aggressively-sometimes unfairly-to maintain its position. Meanwhile, other major players like China no longer require protectionist policies but still resist competing on equal terms. Europe creates challenges with persistent bureaucracy, excessive risk aversion, and overregulation that hinder its potential while relying too heavily on U.S. leadership.
So all sides feel exploited. The U.S. sees itself as footing the bill for a global system that others game. Other countries see the U.S. as a bully. Both are right, to a degree. The U.S. has ways to make others pay for its missteps - and should move away from that. But other nations are strong enough now to contribute more constructively and reduce their dependence.
The Trump Administration's Approach
For President Trump, tariffs are less about economics and more about power dynamics and deal-making. While many criticize his method as being counterproductive and hurting U.S. consumers, he sees tariffs as a tool in a high-stakes game of economic chess to get other nations to comply and play fairly.Also, it is worthwhile to consider that tariffs may prove less harmful in a world where productivity gains from AI and automation may somewhat counteract inflationary pressures.
We should hope that the ultimate outcome is not permanent global barriers but rather a new and more globally accepted set of norms for cooperation.
Implications for Businesses and Investors
Investing isn’t about crossing your fingers—it’s about seeing the world as it is and positioning your capital accordingly. Success hinges on understanding how businesses operate, adapt, and deliver value. Tariffs might slow growth, but resilient companies don’t flinch. They pivot supply chains, leverage their pricing power, and find innovative ways to deliver value. Despite all the current noise around Tesla, it serves as a good example. The company has been building cars in the U.S., China, and Europe for many years, not by coincidence but based on a sound strategy to manufacture and serve customers where they reside.
In the short-term markets are often driven by emotions rather than facts and hence overreact. That’s your edge. As Benjamin Graham, the father of value investing, put it: "The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more."
At RICHTWERT CAPITAL, we invest in businesses led by strong management teams with enduring advantages and the agility to thrive amid chaos that are built to last and attractively valued. Instead of fearing volatility, we welcome the opportunity to buy and own quality businesses at attractive prices, setting the stage for handsome rewards over time.
So don’t let uncertainty paralyze you or force you to make costly mistakes. Ignore the noise, focus on fundamentals, and invest in companies built to endure.
Bahram Assadollahzadeh, CFA
April 2025
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