Why Tariffs Lead To DEFLATION: Wall St Veteran's RECESSION Warning | Jared Dillian

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The tariff situation is evolving fast. On Tuesday, imports from Canada and Mexico faced 25% tariffs. On Wednesday, President Trump granted US automakers a 30-day tariff exemption. On Thursday, he paused most of the new tariffs until April 2. Where will things stand when this interview goes lives on Friday, March 7?

Americans buy a lot of stuff from Canada and Mexico—a combined $918.6 billion in 2024. This includes oil, electronics, cables, machinery of all types, medical instruments, furniture, commodities… A hefty 22.8% of vehicles sold in the US come from Mexico.

The assumption is tariffs will lead to higher prices. Will they? I don’t think anyone knows, but it is worth considering a less reported potential outcome: Deflation.

As today’s guest ‪@TheJaredDillianShow‬ says:

"The conventional wisdom is that tariffs are super inflationary. We're going to be paying 25% more for all these goods. It causes inflation. Actually, what tariffs do is they slow down the economy and it's a deflationary force."

Add in the potential for a recession and higher unemployment, which Jared says could rise to 6%–8%, and you have even more deflationary forces at work.

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Timestamps:
00:00 – Introduction
01:10 – Time to worry about a recession?
04:10 – Why interest rates are going down
07:15 – Bear market ahead?
11:50 – Why tariffs are deflationary
15:20 – The tariff offset
16:03 – The dollar is following the 2017 pattern
18:35 – Bullish on bonds
20:06 – Is oil bottoming?
21:22 – The Awesome Portfolio