So sit on my dollars or buy film to fill my fridge? 🙂
Marcelo
Marcelo,
A good question. Depends...
In the worse case trade wars can have unintended consequences like create the Great Depression. During a worldwide economic collapse it is best to hold assets and wait it out. This is what Joseph Kennedy did. He bought distressed assets and moved his family to Florida to enjoy the low cost of living to wait it out. I consider this what the "Smart Money" will do (the very rich).
The other unintended consequence is inflation where paper money looses value and is eventually becomes both worth-less and becomes worthless.
I frame this with my bias as a globalist who is pro free-trade with an understanding that price controls do not work in either capitalist systems, socialized systems, or communist systems.
Tarriffs can be looked upon as a subsidy to support or favor a product or industry, and economic theory indicates that subsidies have the inadvertent consequence of raising prices.
Then there is this thing called "Disinflation" where cheap products from China allowed Americans to maintain a certain standard of living for decades even though their wages have been stagnant over those very same decades.
There is a compounding: places where there is excess labor means labor costs are cheap like China and Asia. Places where there is not abundance of labor like the U.S. and Europe labor costs are high. I don't think I-phones could be made in the U.S. without huge price increases. I also don't think Kodak film will become cheaper either.
What is helpful to understand is that deflation is really "excess supply" and this translates into lower prices. The disinflation we have enjoyed over the past decades is tied to excess supply pushing down prices. The opposite happens when there is not enough supply meaning shortages cause price increases.
No clarity at this point other than if things esculate economies (even in the U.S.) will suffer, especially in the developing world, and expect higher prices. Over the long-long term though, if the U.S. seals its borders, quits NATO, and pretty much isolates itself from the world it is a vast enough country to exist on its own, but I don't think I would want to live here. I don't expect good things to happen with my understandings.
Cal