December 6, 2021

The business world is buzzing since the White House imposed tariffs on foreign steel and aluminum last week. I’m not sure what this means for America as a whole — I’ve heard many arguments on all sides ranging from a boon for American industry, to they’ll punish consumers with higher prices, or they’ll start a destructive trade war, to the real possibility that they might actually change nothing.

If it were up to me, I’d stick with free trade, instead of having the government try to promote winners and losers with trade barriers. Still, we can’t know how things will play out because meaningful details of the new tariffs (like who might be exempt) are still undecided. And the biggest impact of tariffs will come from potential retaliation by other countries. These consequences can only show up over time.

Export industries are the most at risk. Raising tariffs always invites retaliation, so exporters in the energy, industrial goods, and agricultural sectors have to worry about how new trade barriers may disrupt their activities. Fortunately, the US economy has a lot going on that doesn’t involve exports.

These days, American economic dominance comes from services, not manufacturing or farming. The technology, media, finance, and medical sectors account for a huge portion of the US economy. They’re top quality, and not that vulnerable to foreign tariffs.

As I think about the worst-case scenario of a trade war, I feel renewed confidence in Alliance’s investment strategy. In real estate, location is paramount, and no foreign competition or retaliation can threaten a well located property catering to a service industry. If we specialized in leasing factory space to airplane manufacturing companies, I might be worried. But that’s not the case.

Alliance specializes in serving the medical industry. No matter what happens with foreign trade, Americans will still need healthcare, and that care will still be delivered locally. Our investments are essentially trade-war-proof.

While I don’t know for sure how things will turn out, I’m feeling good about Alliance’s strategy. We’re focused on being the best players in a narrow niche that is growing fast and is well insulated from global chaos. We’ll thrive in almost any conditions, including a trade war.

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