The Contrarian Investor Podcast
Tariffs Have Changed 'Plumbing' of Global Finance: Axel Merk
May 6, 2025
In this engaging discussion, Axel Merk, Founder and CIO of Merk Investments, reveals how Trump’s tariffs have disrupted the global financial system. He explains the fragmented shift away from US dollar assets and the potential for stagflation due to supply shocks. Axel also emphasizes historical precedents for navigating economic challenges and the growing case for gold amidst uncertainty. He highlights concerns for both Europe and China, and speculates on the risk of recession while addressing misconceptions about economic data.
46:41
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Quick takeaways
- Tariffs have fundamentally disrupted the global financial system, creating significant risks and opportunities amidst a changing economic landscape.
- The current stagflationary environment necessitates reconsideration of supply shocks, challenging the effectiveness of traditional economic policy responses.
Deep dives
Impact of Tariffs on Global Finance
Tariffs have significantly disrupted the existing global financial framework, leading to profound changes in trade dynamics. Imposing tariffs influences financial flows, akin to altering balance sheets in business transactions, where the equivalency with trade deficits could detrimentally affect revenue streams for companies. This shift can result in rising long-term yields due to the need for domestic financing to manage increasing deficits, heightening market pressures. Axel Merck suggests that the implications of such tariffs extend beyond mere trading practices and force a reconsideration of financial strategies in a highly leveraged global economy.
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