Friday, 7 March 2025
Written by MYTHEO
Donald Trump has secured a second term as the US president, and with it, his beloved economic weapon is back—tariffs. He has often called tariffs the most “beautiful word” in his economic playbook, using them as a key tool to achieve his "Make America Great Again" (MAGA) vision.
And maybe, just maybe, he has a point.
The US is a service-based economy, with global trade making up only about 25% of its GDP. Compared to other nations, America is far less vulnerable to trade wars. So, in theory, tariffs could work in Trump’s favor.
But here’s the problem: Trump’s understanding of tariffs has always been a lightning rod for controversy. He insists that tariffs won’t raise prices for American consumers and that foreign countries will bear the cost. No economist agrees. Not even his fellow Republicans back this claim.
Even Elon Musk—his so-called “partner in crime”—has never commented on Trump’s tariff logic. But Musk just launched his own AI chatbot called Grok (X.AI) on February 17, 2025, calling it the “smartest AI on Earth.”
So, on Day One of its release, we asked Elon’s AI the million-dollar questions on tariffs.
First Question
"When Trump imposes tariffs on Chinese goods? Who pays the tariff, the Chinese exporter or the U.S. importer?"
Second Question
" This means tariffs are high, they increase the price that consumers pays for the product. In other words, tariff inherently inflationary"
Third Question
"As consumers, what is the best way to hedge against this kind of inflation"?
Grok AI’s answers on tariffs , which are in line with most of the views of the economists and market analysts , confirmed that President Trump is wrong. Grok AI also agreed with us that tariffs drive up the cost of imported goods and fuel inflation. What’s even more compelling is Grok AI advice on hedging against inflation, which aligns perfectly with the assets inside the MYTHEO Inflation Hedge Portfolio.
When asked what is the best way to protect from inflation, Grok AI’s first recommendation was portfolio diversification, emphasizing real estate, commodities, and gold. Next, Grok pointed to fixed-income securities with inflation protection, specifically Treasury Inflation-Protected Securities (TIPS). These very assets form the core of MYTHEO’s Inflation Hedge Portfolio, a strategically designed investment solution for those looking to safeguard their wealth in an inflationary environment.
Why does this matter? Because inflation erodes purchasing power, and without the right investment strategy, your hard-earned money could be worth significantly less in the future. The MYTHEO Inflation Hedge Portfolio is built to combat this, leveraging assets that have historically performed well during inflationary periods. Let’s explore how:
Inflation-Linked Bonds (TIPS)
Treasury Inflation-Protected Securities (TIPS) automatically adjust their principal based on changes in the Consumer Price Index (CPI). This means that as inflation rises, the value of these bonds increases, ensuring a real return over time. This feature makes TIPS an invaluable tool for preserving purchasing power and mitigating inflation’s impact on investments.
Gold
For centuries, gold has been a refuge during times of economic uncertainty and currency devaluation. Unlike paper money, gold’s value is intrinsic and universally recognized. It often moves inversely to stocks and bonds, providing a crucial hedge when inflationary pressures mount. If history has taught us anything, it’s that gold shines brightest when inflation surges.
Infrastructure & Base Metals: Capitalizing on Rising Costs
As inflation rises, so do the costs of raw materials like copper, steel, and aluminum—essential components in infrastructure projects. These projects, often backed by long-term contracts indexed to inflation, ensure steady income growth. Additionally, the increasing demand from emerging markets fuels further price appreciation, making base metals a strong inflation hedge.
Agriculture
Food prices tend to rise alongside inflation due to increased costs of labor, fuel, and fertilizers. However, demand for agricultural commodities remains inelastic—people still need to eat. This ensures that agricultural investments often thrive during inflationary periods, benefiting from the necessity-driven demand.
Energy
Oil and gas prices typically rise with inflation due to the increasing costs of extraction, refining, and transportation. As operational expenses grow, so do energy prices, creating an inflationary hedge that can counterbalance losses in other asset classes. Energy investments thus play a crucial role in shielding portfolios from inflation’s corrosive effects.
With inflation constantly looming as an economic threat, protecting your wealth isn’t just an option—it’s a necessity. The MYTHEO Inflation Hedge Portfolio is meticulously designed to help you navigate these turbulent times with confidence. By leveraging assets that historically thrive in inflationary environments, MYTHEO offers a smart, strategic approach to preserving and growing your wealth.
Don’t let inflation chip away at your financial future. Take control with MYTHEO and invest in an inflation-resistant portfolio today!
This material is subject to MYTHEO’s Notice and Disclaimer.
