Q&A – What Should You Be Buying Now? Driven By Braman Motorcars
Each day I feature a listener question sent by one of these methods.
Email: brianmudd@iheartmedia.com
Social: @brianmuddradio
iHeartRadio: Use the Talkback feature – the microphone button on our station’s page in the iHeart app.
Today’s Entry: @brianmuddradio With the tariffs set to hit are there things you think we should be buying now?
Bottom Line: Yes. Yes, there are many items that it does make sense to be buying now due to the impact of President Trump’s reciprocal tariffs, with a major caveat attached. The major caveat is that you’re not accelerating purchases by using debt to do it. The weekend provided a window of time for things in the financial markets to settle down, tensions with world leaders to calm down but also for everyone to take stock, in some cases literally, with the situation at hand. Today’s question is an excellent question and a smart way to be thinking about things. What should I be doing? Where are the opportunities?
Let's start this conversation with an especially important point. President Trump’s reciprocal tariffs don’t take effect until Wednesday. That means anything that you buy today, no matter where it comes from, will not have been subjected to potential price increases due to the soon-to-be tariffs on imported goods. That means it’s especially smart to be stocking up on basics, not hoarding mind you, sooner than later. What kind of stuff?
Just in case you’re inclined to cling to cases of toilet paper a la what we saw during the pandemic...don’t. Only 10% of toilet paper is imported (most of that comes from Canada and is sent largely to northern states). Likewise, food isn’t significantly impacted either – as only 20% - 30% of what we eat tends to come from outside of what we produce domestically. The significant categories for most people to consider are these: Appliances, clothing and electronics. Based upon what you’re buying up to 90% of what we buy in the United States in those categories is made outside of the United States. Appliances and electronics also tend to be pricier purchases for most consumers as well making it especially smart to prioritize those purchases rather quickly if there’s a need.
The other big one is something we talked about last week... A car. The automotive tariff is a separate tariff that’s already in place but that doesn’t mean it’s too late to buy without feeling the effects of a tariff that might cost you thousands of additional dollars to buy – especially if it’s an import.
At the time the automotive tariff hit last week, the average inventory of vehicles across all brands was 96 days. Meaning that under normal buying conditions, consumers could purchase cars for the next three months without feeling the effects of tariffs. That’s important because what you don’t want to be doing is panic buying anything today – but especially a purchase as sizeable as a vehicle. Instead, if you were planning on buying a new vehicle at some point this year – it's absolutely a smart thing to plan on doing it soon.
It’s possible that there’s a run on certain vehicles that are particularly impacted, so supplies may not last three months. For example, Land Rover announced over the weekend that they were pausing all new deliveries into the United States for now due to the tariffs. I’d expect to see a run on Land Rovers over the next couple of weeks. And of course there are more announcements like that which could come.
Now, at the onset I mentioned that it made sense to buy things impacted by tariffs provided that you’re not using debt (vehicles excluded). The average APR on a credit card is currently 20%. The average impact of tariffs is likely to be less than 10% on impacted items. There’s no value proposition to buy on debt to avoid paying tariffs. And again, there will be no shortage of toilet paper – unless it’s self-induced from irrational panic buying.
Hopefully that’s helpful and happy shopping!