We've seen this movie before and should not have a different ending/Commodities/Sports and those seeking value

You've heard me argue this year that so goes the Mag 7 stocks, so goes the US dollar because of the large holdings of them by foreigners. Here is a chart of the MAGS ETF and the DXY over the past year.

MAGS in white, DXY in orange

In the debate over tariffs, the good thing is that we don't have to go back too far for evidence of its impact. In December 2019 the Federal Reserve released its economic study on the steel and aluminum tariffs slapped on in 2018. Here is what they said, "A key feature of this analysis is accounting for the different ways that tariffs could affect manufacturers in the presence of global trade and supply chain linkages. On the one hand, US import tariffs may protect some US based manufacturers from import competition in the domestic market, allowing them to gain market share at the expense of foreign competitors. On the other hand, US tariffs have also been imposed on intermediate inputs, and the associated increase in costs may hurt US manufacturers' competitiveness in producing for both the export and domestic markets. Moreover, US trade partners have imposed retaliatory tariffs on US exports of certain goods, which could again put US firms at a disadvantage in those markets, relative to their foreign competitors."

Ok, this sounds like an exact replica of what we are dealing with right now. Their conclusion, "We find that the 2018 tariffs are associated with relative reductions in manufacturing employment and relative increases in producer prices. For manufacturing employment, a small boost from the import protection effect of tariffs is more than offset by larger drags from the effects of rising input costs and retaliatory tariffs. For producer prices, the effect of tariffs is mediated solely through rising input costs."

Finally, "While one may view the negative welfare effects of tariffs found by other researchers to be an acceptable cost for a more robust manufacturing sector, our results suggest that the tariffs have not boosted manufacturing employment or output, even as they increased producer prices. While the longer-term effects of the tariffs may differ from those that we estimate here, the results indicate that the tariffs, thus far, have not led to increased activity in the US manufacturing sector."