Tariffs: The Logic Behind the Deals
By Kevin Swanson, Potentia Wealth CEO
06/2/25
In the late 1970s, my mother worked for a real estate broker named Charley. Charley was what you might call an old-school dealmaker — known around town as a bit of a “horse trader.” He had a knack for making deals that left everyone scratching their heads, until they realized he’d actually pulled off something brilliant.
Taking steps to achieve the end goal
One of Charley’s deals in particular sticks with me. He was trying to sell a piece of land for a client who needed cash. And while the land that was beautiful, it was totally landlocked and without road access — not exactly an easy sell. At the same time, he knew of another man trying to unload a sailboat. But the landowner didn’t want a sailboat. And the boat owner didn’t want real estate — he wanted a motorcycle. Charley wasn’t fazed.
He found a third person — a guy with a motorcycle that was roughly the same value as the boat. That guy didn’t want a boat, but he wanted to invest in real estate. So, Charley arranged a three-way deal:
- Sailboat owner: Traded his boat for the motorcycle he wanted
- Motorcycle owner: Sold his newly acquired sailboat and combined the proceeds with money from savings to purchase the land he wanted
- Land owner: Sold his land and got what he wanted — money
To an outside observer, these trades seemed unrelated. But to Charley, it was all part of a bigger picture. He knew where he wanted to end up, and he orchestrated a series of moves to get there. And that’s similar to how federal tariff policy works.
Tariffs: The bigger picture
On the surface, a tariff is a tax on imports. But the end goal isn’t to make foreign goods more expensive — it’s part of a chain of decisions aimed at something much bigger: fueling the U.S. economy.
When it comes to tariffs, this is the big-picture logic:
- Tariffs make foreign goods more expensive, which gives domestic producers a competitive edge. This should lead to improvements in the U.S., such as increased production, more jobs, and higher wages.
- Tariffs should also cause Americans to buy fewer imports and more domestic goods, which improves the trade balance — we’re sending fewer dollars overseas and supporting American industries instead.
- A better trade balance and stronger domestic production help increase gross domestic product (GDP).
- When GDP goes up, so does taxable income. This increases federal revenue from taxes, while decreasing federal expenses (like unemployment benefits).
Boosting the U.S. economy is the end goal
Tariffs are rarely just about making imports more expensive. To fully understand a tariff policy, you have to consider the end goal — boosting the American economy. Like Charley’s land-boat-motorcycle shuffle, it’s about what happens at the end of the chain: increased domestic production, more U.S. economic activity, a stronger tax base, and a smaller trade deficit.
Lately, we’ve all been caught in a whirlwind of global economic horse trading — tariffs, subsidies, and retaliatory trade moves. These moves have caused a lot of confusion, uncertainty, and, in some cases, fear. From the outside looking in, it can seem like the rules keep changing mid-game. But it helps to keep the end goal in mind, and trust that these moves will eventually improve the American economy.
When questions arise, we’re here to help
As always, your partners at Potentia Wealth are here to help you sort through your questions. And we can help you understand how economic policies, such as tariffs, might affect your investments, business, and broader financial goals.
Unlike Charley’s deals, which seem confusing to the onlooker, our goal is to be transparent and offer clarity. Let’s stay ahead of the curve — without needing a sailboat or motorcycle to get there. If you’re curious how the changing trade policy might affect your bottom line, let’s talk.
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