When I saw stocks that I was interested in during

When I saw stocks that I was interested in during the U.S. market today, only two were green (rising) and the rest were all red (falling). It was ridiculous to see the won-dollar exchange rate and the government bond rate. The decline was also scary. There were a series of stocks that fell more than 10 percent. Small and medium-sized stocks that rallied sharply in the bull market faced a big shock. However, there was no big negative news that could push the market to a corner. The good news of the resumption of the federal government was buried. Hard-liners at the Fed just repeated hawkish remarks in the past. Nevertheless, the market was extremely hysterical. In fact, even if the Fed freezes interest rates, the impact on the intrinsic value of assets will be minimal. I don’t know if you say you raise interest rates, but overreacting to the freeze may be self-confident that it is difficult for the market to justify its current overvaluation.

In addition, it can be said that as time goes by, the market feels the burden of imposing tariffs that have lasted for months. The Fed’s hawks are unable to escape from anxiety over prices using tariffs as an excuse. There has been a kind of accumulation of fatigue in the market. Then, shouldn’t we stop imposing tariffs? Just in time, the U.S. Supreme Court began to examine the validity of the IEEPA (International Emergency Economic Powers Act), which President Trump used as the basis for imposing mutual tariffs. However, it is unlikely that Trump will give up the tariffs. It is because of nostalgia for the past. Actual tariffs were a pillar of the U.S. federal government’s tax revenue.

The Customs Act was the first law signed and enforced by first President George Washington. Since then, customs at ports such as New York and West Bank have become the most important offices that earn tariffs, with tariff imports accounting for 90% of federal tax revenue. In U.S. history, tariffs became the most important moment when President Lincoln raised moribund tariffs to 47% during the Civil War. Of course, tariffs contributed to the Civil War. Lincoln, which imposed protective tariffs for the North, could not be ignored by the South. Since then, the Republican Party based there has been a prosperous state as the North has won. All Republicans won the presidential election, with the exception of Grover Cleveland, who served as a stepping-stone president like Trump. Republican presidents maintained high tariffs.

Democratic President Woodrow Wilson, who won the 1912 presidential election, significantly lowered tariffs. President Wilson is well-known for his self-determination. Wilson legalized income tax through constitutional amendment and introduced a progressive income tax system. It also helped bridge the extreme gap between the rich and the poor and greatly helped to expand tax revenue. During World War I, income tax accounted for around 70% of the federal government’s tax revenue. Recently, the Republican administration has focused on tax cuts that lower income tax. Tax cuts are problematic. They deepen the fiscal deficit. Trump’s alternative is to impose tariffs. It is a plan to cover the government’s tax revenue with tariffs and, if done well, eliminate income tax. It seems difficult for Trump with these ideals to step down from the tariff front. Tariffs are expensive from an economic point of view. It is rather strange if the asset market does not bear the cost. The Fed is the only one who can save the market from this burden. But it also has to be an experienced driver. Or the inflation burden will increase. However, it is true that there are doubts whether the Fed, which is divided by factions, will play its role well.