Marnie and CampoI asked you before, do you know anything about tariffs? So you don't really know much about them, and I have no idea, and lots of people are asking questions, well, what are they? What are tariffs? Well, Alex Jemison, he's the financial advisor at aj Financial Planning, and he joins us, Now, good morning, Alex.
Hore you go, Mane. I'm doing well. Good morning.
Now tell us all about what tariffs are and how it's affecting Australia. Obviously, Donald Trump last week said hey, We're going to implement tariffs on Australia. What does that mean for us?
Yeah, I think it's really primarily it's a protection mechanism, so you know, you're trying to protect your local industries. Obviously there's other places in the world that can manufacture stuff really cheaply, and because of the cost of labor, in some ways, the governments can make it a little bit more of an equal playing field. They introduced these ideas of tariffs, so essentially it's an additional tax to sort of level out the playing field between I guess different sort of countries and different sort of cost faces.
Well, have we been ripping America like Trump's been saying about other countries have been ripping us off for years? What's what have we been doing? What do we have to be hit with tariffs?
Look, Trump's quandrum agats to some degree a little bit. He's trying to introduce some tax cuts on businesses to drop it down to about fifteen percent, make it really attractive for their local businesses in the US, and he's got to get the money to offset those cuts somewhere else, and tariffs is an easy kind of way to do it politically, It's an easy sort of sell to some degree in terms of are we ripping off the US? Like our currency, you know, is a lot weaker than the US. You know, we're about sixty three cents. So yeah, we, as much as we might not want to think it, to some degree, we are a lower cost sort of economy than the US economy, and so we do have those sort of competitive advantages. I'm not sure really there's probably other people that are doing it more in terms of lower costs. Again, yeah, certainly Australia does have an advantage.
Yeah, Okay, so this is what he's doing, the tariffs, Where are we going to see those costs increase? And how much is that going to be for us on a general scale.
Like we import a lot of our aluminum from China. You know, there's always ongoing sort of arguments around dumping those types of materials here locally and can the local producers compete, which you know, we're facing the same sort of quandrum to some degree in terms of the Australian economy. Like to some degree it's just going to flood the market more because they can't ship the stuff over to the US, and you know, you see all the costs increases that are going on with building. At the moment, I don't think Australia is really going to be largely affected in terms of the MUM and par level in terms of GDP numbers and our Australian economy certainly have an impact on those types of figures.
All right, Well, I guess what we have seen in the last week or so is just in the stock market. When he announced he was going to tariff, everybody, yeahsit Haywide didn't know a lot of people just lost. But it's starting to correct itself now.
Actually, it is like we have this great reader. It's called the sentiment reader, and it's the measures fear in the market, how freaked out investors are out and every time it's sort of flashes red with blood in the water, so to speak. The investors, the smart money, rub their hands with great delight and go, oh, this is a wonderful opportunity. You know, we've got all these tanigued investors. Let jump in and pick up. And we're seeing that in the last couple of days the smart money so pick up a little bit of opportunities because of the sell off, So he will Wall Street and the Australian share market. You know, smart money have all these readers and you know they get pretty excited when they see these sort of readings get as extreme as they have been. Yeah, all right, we're gonna have to leave it there.
Thank you so much for clarifying a few things for us.
Terrific. Thanks so much.
We can people go and check you out.
Alex just AJFP dot com dot au, just on the website.
