April 4, 2025 – Curious about the economic and market outlook amidst global trade tensions? In this gripping Financial Sense Newshour discussion, Jim Puplava and co-host Cris Sheridan discuss Trump’s bold tariff moves as part of a broader push to re-industrialize America. From jaw-dropping stats—like China’s shipbuilding dominance and US dwindling weapons stockpiles—to the promise of high-paying jobs and a tech-driven 4th Industrial Revolution, they reveal the stakes: national security, economic reset, and a potential trade war. According to Puplava, President of Financial Sense Wealth Management, first the pain, then the gain. Dive into this eye-opening conversation to find out how it’s reshaping markets and your investments!
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Discussed in today's show:
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Trump’s reciprocal tariffs aim to re-industrialize the U.S., sparking fears of a global trade war.
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National security is at risk due to a hollowed-out industrial base and reliance on China for manufacturing and rare earths.
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Warfare is shifting to cost-effective drones, exposing U.S. production weaknesses (e.g., 5.5 years to replenish ammo).
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China dominates globally, producing 29% of manufactured goods and 50% of shipbuilding.
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Re-industrialization could bring high-paying jobs via investments like Taiwan Semiconductor’s $165B U.S. factories.
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Tariffs may negotiate lower global rates, benefiting the less export-reliant U.S. (11% GDP).
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Investment shifts to commodities, tech, and utilities as the economy pivots to production.
Transcript
Cris Sheridan:
Welcome, everyone, to today's Big Picture. Today we're going to discuss first the pain, then the gain, looking at the Fourth Industrial Revolution. Joining us on the show today is, as always, our president here at Financial Sense Wealth Management, Jim Puplava. I'm Cris Sheridan. And today we're going to discuss the big picture. As you all know, Liberation Day took place this week, Trump announcing reciprocal tariffs on a large number of our trading partners, fear that this may start a global trade war, raise inflation rates, and push the US economy into recession. There is a bigger picture here, however, and that is Trump's attempt to re-industrialize the American economy by moving back to the country's manufacturing roots. Now, this is not just about jobs, but it's also a perceived matter of national security. And so we're going to discuss some of the details behind that today. So, Jim, as always, what is the big picture here as you see it?
Jim Puplava:
Well, let's start out with what we're trying to do. It's basically an economic reset. And what we're going to do is we're going to step back and take a look at all of this, because a lot of the noise—you're hearing it every single day—tariffs on, tariffs off. Who's putting this tariff on? What are we responding to? What are they responding to? And I want to get away from that and take a look at this from a bigger picture. There was a key speech, and you mentioned this about national security. Erik Prince, who was a former Navy SEAL and the founder of Blackwater, gave a long, very insightful speech at Hillsdale College. And basically what he's talking about, he's saying something that we have said here on the program. If the US was to fight World War II today, we could not do that with the hollowing out of our industrial base. The contention here on the program is we couldn't do that. And the other thing that Prince talks about is how warfare is changing. We're seeing this in Ukraine, we're seeing it in Israel, where basically new weapons systems, which are less costly and more powerful to use. For example, you know, you send an $800 drone and we fire off a $150,000 Javelin missile to take out an $800 drone—that doesn't work very well. You also have a device that you can use that's a tank killer that you can make for about $3,000 versus a $1,000,000 missile. And one of the things that has happened is we have lost our productive capacity. And I want to just give you an idea how this plays on national security. There was a study done by, I think it was JPMorgan, on the replacement time for key weapons systems in the US military. So if you take the 155-millimeter ammunition, we have sent over 1,074,000 of these to Ukraine. However, we only produce 240,000 of these a year. So it would take us 5.5 years to replenish what we've sent to Ukraine. If you want to get to Stinger missiles, we sent them 1,600. Our national production is around 100 a year. It would take us almost 18 years to replenish what we have sent there. So it's not just that warfare is changing. We're going to less costly. With the advances in technology, drone warfare is going to be very big. The Navy's working on drone submarines, we're working on drone planes that will take off on aircraft carriers. But it's used in warfare. It's less costly compared to, let's say, firing off missiles and the technology that is advanced out of the Russian war. We could fire a missile and the Russians can jam that missile and make it useless. And more importantly, they can pick up where that missile was fired. So if you don't get the hell out of there after you fire the missile, they're going to get you. So warfare is changing, and we're not capable of producing all the things that we need in war. And this is just one example. Let's talk about something else. China controls 50% of the world's shipbuilding. They are also the largest manufacturer in the world. They manufacture on an annual basis about 4.7 trillion, or roughly 29% of the global total. And that's, Cris, more than the U.S., Japan, Germany, and India combined. China accounts for 35% of rare earth reserves. They are 80% of global production of rare earths, 70% of global extraction, 87% of global processing. And if you take, you know, we talk about AI, we talk about technology. Technology needs rare earth minerals. Hence why Trump is talking about rare earth minerals with Ukraine or in Greenland. And it doesn't stop there. Gallium, they account for 80% of it. Germanium, 60%. Antimony, 78%. Graphite, 80 to 95%. So the US is now dependent on China for military materials, from chips, magnets, to minerals to make our weapons systems. And we can't manufacture these legacy weapons systems as fast as we are using them. So everything that we've shoved into the Ukraine war over the last couple of years, it's going to take us at current production rates, unless we go to a wartime footing, it's going to take us five to eight years. And the key that I want to talk about here, we have spent probably the last 30 to 40 years hollowing out our industrial base, which led to the Rust Belt in the United States, the Midwest where we used to have factories. Those factories have moved and they've left now. A lot of this, Cris, I think started in the '70s when you had double-digit inflation, you had the strength of the labor unions, and companies, to be competitive, started moving production offshore. And then that continued with globalization, especially with the trade agreements that we came up with, NAFTA and various other things. And as a result, most of the manufacturing base in the United States—I mean, the United States used to manufacture, account for 25 to 30% of the world's manufactured goods. Today we're probably closer to about 11%, while China is now 29%. So what Trump is trying to do here is he's trying to rebuild the US economy and get the US back to our industrial and technological roots. And Cris, this is really key. If he fails, the US will be nothing more than a satellite country in the Chinese global empire. Because I mean, you think about the packages you get every day from Amazon. Take a look at where they're made. I have gym equipment. The company that designs them is here in Poway. Where is it made? It's made in China. Just about everything I get comes from China. And so what he's really trying to do here is re-industrialize the United States so we start making stuff. And this was brought to the fore and really elevated during COVID where we saw these supply chain disruptions. Everything from pharmaceuticals to manufactured goods to chips—they were manufactured in China. And with COVID, they were in short supply, from appliances. I can remember talking to a client of mine that was having a house built. It was basically a tract builder; it was Toll Brothers. And it took almost 18 months to build the house instead of the regular 12 months because they couldn't get windows, they couldn't get ovens, refrigerators, appliances that you need. And this really drove home the point. And now we're seeing strategically, it's not just us that has to do this, it's also the Europeans and others. The Europeans are probably a little better off because they did not outsource as much of their manufacturing base as the US did. But essentially, Cris, right at the top, what we're really talking about is an economic reset for the United States. And we're going to get into how this is going to play out.
Cris Sheridan:
Earlier you mentioned how China controls about 50% of the world's shipbuilding. That's a very important development. And we actually discussed this a couple of weeks back with Bruce Melman on a very eye-opening report. This came out from the Center for Strategic and International Studies, and they basically said that if you look at 2024, one single Chinese state-owned shipbuilder produced more commercial vessels by tonnage last year than the entire US industry has since World War II. So that just goes to show you how dominant they've become. Like you said, not just with shipbuilding but in rare earth metals. I mean, they have a chokehold on all these areas. So obviously the focus right now is on tariffs and the disruption that this is causing. You know, some of our guests that we've been having on our program talking about further downside in the markets ahead of 10, maybe 20% off the highs. Where do tariffs fit into this larger re-industrialization process that you're discussing today?
Jim Puplava:
Well, I mean, just take a look at it from the top. If you're going to reshore and bring factories back to the US and we start making goods, we start shipping them. If everybody else is placing tariffs on our goods, it harms U.S. manufacturing as it did over the last two to three decades. And I want to put this into perspective because we're acting like, wow, the US is doing something that's unfair. Well, let me put this into perspective. China puts 20% tariffs on a wide range of US goods. Canada has tariffs up to 300% on specific agricultural goods and 25% on non-energy goods. Mexico has similar tariffs of 20 to 25%. Europe has tariffs of 25%. India has as much as 100% on agricultural goods. Now we're in a position to win this and because we still have the largest economy. But more importantly, the US relies on exports for only about 11% of GDP. So, the US is more self-sufficient than Europe, Asia, or China. If you look at Europe, Europe depends on 23% of their GDP on exports. Canada depends on 34% of exports for their GDP. Mexico, 35 to 36%. China, 20%. Japan, 20%. So you know, the media is acting like, oh gosh, he's doing something that's crazy. Well, wait a minute, all these countries place tariffs on all our goods. Why is it unfair for us to put a tariff? Because I think what this is going to do, Cris, I think in the end this is going to be a negotiating tool. Because Europe, Asia, China is more vulnerable to tariffs because their economies depend so much more on exports versus the United States. I mean, if you're exporting 34 to 35% of your economy as exports compared to the U.S. 11%, who's at greater risk of tariffs? It's these countries. And so eventually, I think what you're going to see is you're going to see it'll get down to reciprocal tariffs. You put 10% on us, we're going to put 10% on you. In the end, Cris, I think you're going to see tariffs come down across the board because these countries that are so dependent on exports cannot sustain, especially when we have the largest market in the world. And remember, China is the second largest economy in the world, and they place tariffs on imported goods. So if you're Europe or Canada or Mexico and you want to ship goods to the two largest economies in the world, the US number one, and China number two, if both of them place tariffs, what are you going to do? You're going to have to reduce your tariffs. And that's where I think this is going. And, once again, these figures are approximate, but you understand why they are concerned if we do the same thing to them. And you know, the way the media is acting about this, it's like, oh, this is unfair, what Trump's doing. Unfortunately, members of the media are more political and they're not astute economically. A lot of them are ignorant when it comes to economics, to be quite honest. So I suspect when this plays out, what we're going to end up by the time we get to around May or June, is reciprocal tariffs. And I think they will be coming down globally. Why is all of this important? Once again, you can't re-industrialize your economy when the competition places tariffs on your goods, and we don't. It's been that way for four decades, and everybody's gotten used to this and comfortable with this. You place tariffs on U.S. goods and we don't do the same to them. And that's the way it's been for the last three or four decades. That's changing. And all of a sudden everybody's waking up and saying, wait a minute, we can't do this the way we used to.
Cris Sheridan:
Let's go back to the re-industrialization process. This is the big picture as you see it, especially when we think about national security concerns and the fact that China has a near monopoly now in so many different areas. If we were actually to be in a warlike environment with them, there's no way that we can now compete with them just in sheer manufacturing prowess. So tell us how you think the re-industrialization process is going to play out.
Jim Puplava:
Well, let's talk about right now. There have been announcements by companies and countries of $4 trillion of new investment by companies and countries back into the US, and let's just take a couple examples. Stargate, a $500 billion joint venture between OpenAI, Oracle, and MGX to build AI infrastructure. They're building their first $100 million investment in Texas. Taiwan Semiconductor is going to invest $165 billion building factories here in the US. Saudi Arabia is going to invest $600 billion. Apple has announced $500 billion. And this is a strategic move by Apple because they are very vulnerable to Chinese manufacturing if we get in some kind of economic war. We've seen announcements from Ford, GM, Tesla, and Hyundai reshoring factories back to the US. And I want to give an example of what this means longer term for the economy. Let's take where I used to live in Phoenix. There are three factories that are going to come into play, go into operation by next year. Taiwan Semiconductor, Intel's building a plant there, Apple is building there. So you have three massive factories. And let's put this into perspective. What does this mean for the economy and jobs? Taiwan Semiconductor's plant will hire 6,000 high-paying direct jobs, 10,000 indirect jobs. Apple is going to be hiring 20,000 workers. Intel, 3,000 direct workers, 7,000 construction jobs. And it's not just Phoenix. Meta, for example, just bought a little over 2,200 acres in Louisiana. They're going to build one of the largest AI data centers. It's going to be about $10 billion. There will be 500 direct jobs, a thousand indirect jobs, 1,500 ancillary jobs with 5,000 construction workers. And Cris, it's not just the construction workers. These are going to be high-paying jobs, six-figure jobs. These are going to be people that are running $50 million robots in manufacturing. And this isn't going to be, you know, minimum-wage jobs. You're talking about high-level jobs. And think of all the auxiliary jobs associated with these new investments in factories. Everything from raw materials, mining, agriculture, machinery, equipment, energy production, distribution, retail, shopping centers, transportation, logistics, finance, banking, R&D, legal and consulting, education and training. So the knock-on effects could be almost two to three times larger than the actual industrial jobs themselves. This is huge. This is big. And that was one of the problems that we had when we started offshoring. Wages went down because you went to service jobs that did not pay as much as these jobs left. The lower-paid service jobs did not earn the same type of income. You know, I can remember back in the '50s and '60s, one spouse had to work in good supportive family. Now it takes two. So as these manufacturing jobs come back, number one, it is going to cost more because it does cost more to make stuff here. But you're going to see come into play AI and robotics. The factory that's coming back, the factories they're building in Phoenix with Taiwan Semiconductor, Intel, and Apple are going to be a lot different than the factories we built 30, 40 years ago. They're going to be more automated. Robotics are going to be playing a key role in that. But that just goes to show you the ripple effects of bringing those jobs back. If I take a look at those three plants in Phoenix, it may create 30 to 40,000 jobs, not to mention the construction jobs and probably almost two to three times that in ancillary jobs that will go with that. Whether it's retail, shopping centers, you know, more doctors, dry cleaners, grocery stores, all the transportation, gas stations, power—all those things are going to go in as we re-industrialize this country. And you know, Cris, that is what I call the gain. But first is the pain. We got to get there. We got to get these countries that have been leveling 20, 30, 300% tariffs against U.S. manufacturing companies or U.S. agricultural output. We're going to have to get those tariffs down. And the way we're going to do it is, I think the way this will play out is we'll have reciprocal tariffs and those tariffs will be coming down across the board.
Cris Sheridan:
Well, that is certainly the hope, right? Is that as we raise those tariffs to equalize them according to the tariffs that are on our goods, that that will be used as a negotiating tool to lower tariffs on all goods. That's the hope. The fear is that those tariffs will remain in place and you'll see a shrinkage of global trade. You'll see higher inflation and more of a stagflationary environment overall.
Jim Puplava:
If they don't lower the tariffs, they're more vulnerable than we are. As I mentioned, you know, you have countries that are reliant on almost 20—you know, Europe 23%, Canada 34%, Mexico 36%. And it's interesting because two of the countries he picked up, Canada and Mexico, are our two biggest trading partners. And it's rather interesting because there is another dollar index that is based on trade versus the DXY that everybody looks at, which is primarily the euro. And so if you take a look at these countries, they are exceedingly more vulnerable than the U.S., given the fact of the way their economy is structured that relies more on the export of manufactured goods. So if there is a trade war, and let's say we get into one in an economic war and they're not willing to relent on their tariffs and then we put ours in, well, they're going to get—their economies are going to get hit harder than ours because we only rely on exports for about 11%. And also the other—exports, 11%. But that number, Cris, could drop down even further if the US starts industrializing, building plants here so that we don't have to import these manufactured goods. We actually start making them here in the US. The 11% figure on exports could actually drop down to 6, 7%, which means that the US would be a lot more immune to any type of trade war effects because we rely less on exports.
Cris Sheridan:
Okay, so again, as we've discussed, we're looking at first the pain, then the gain. But this is all within the context of a much broader Fourth Industrial Revolution. This is going to be ongoing not just because of pure economics, but also because of national security concerns on the part of the US. The US is still the world's largest economy, and the US is going to do everything that it can to maintain its leadership. A huge part of that again is going to be this re-industrialization process. So given that we are talking about first the pain, we're seeing that right now in the markets. How are we investing currently within the context of this broader conversation?
Jim Puplava:
Well, if we look at the investment implications, as I mentioned, the last three or four decades we've been outsourcing our goods, and consumption has been the main driver of the US economy. As the US de-industrialized, however, consumer product companies were the winners. Outside of tech, that is about to change. As inflation starts to heat up, you're going to see less emphasis on consumption and more emphasis on production. So the economy is going to change. The companies that will do well with this Fourth Industrial Revolution are going to be the leaders. It's going to be industrial companies, it's going to be tech companies, it's going to be utilities. The way we invest over the next five to 10 years is going to be much different than what we've done in the last 10, 20, 30 years. So as the economy does a reset and re-changes back to an industrial base, that's going to change what drives the market. So where are we investing? We're investing in commodities. Why? You can't bring back factories here. If the US goes from 11 to 12% industrial goods, we go back to let's say 15, 18, 20%. What do you need to make goods? You need raw materials. As we talked about earlier in the show today with Mark Mills, you need energy. You start a factory, where's the electricity going to come to run that factory? You need electricity, you need fuel, you need industrial companies. Infrastructure is going to have to change. We're going to have to rebuild a lot of infrastructure. You know, in my own state is a good example. Infrastructure is just falling apart here in this state, whether it's the roadways, whether it's the bridges, whether it is our water systems. And we saw that which came to the fore with the LA fires. They didn't even have the water to put the fire out. And so technology is another area because we don't see that the AI revolution is just beginning. And we also see precious metals along with Bitcoin because one of the things that will happen is you will see the dollar get lower. And what's your dollar hedge, what's your inflation hedge? So we see precious metals and Bitcoin along here. So inflation rates are going to get a little higher, but also wages are going to be a lot higher. When you work at a factory, at Apple's factory, Taiwan Semiconductor, or Intel's factory, you're not making 17 or 15 bucks an hour. You're probably making 50, 60, 75 bucks an hour and making a six-figure salary each year along with benefits.
Cris Sheridan:
Well, given what we discussed today, Jim, you've been discussing now for many years how you believe dividend-paying stocks are going to—should play a pivotal role in investors' portfolios for obviously income, but also for stability. Is that still a thesis that you have, given some of the things that we discussed today?
Jim Puplava:
Oh, absolutely. In the words of Wayne Gretzky, we're going to where the puck is headed. These stocks—the stocks that we're looking at for dividend growth—are going to be a little bit different. They're going to be less on consumption and consumer staples. They're going to be more on some of the areas that are, you know, whether it's industrials—utility stocks used to be widows and orphans stock. Now because of AI centers, cloud centers, and factories coming back, some of these utilities are beginning to look like growth stocks. For example, we own the fastest-growing utility in the country. It pays over 3%. But more importantly, Cris, it's growing its dividend at 9% a year. They've been doing it for the last four or five years, and they should continue to do that over the next five or six years. Energy stocks—we've owned energy stocks, and energy is going to be a big play here, especially natural gas, where you're getting 4 to 7% dividends that are growing at 5 to 10% a year. We own commodity producers that pay special dividends because you can't have factories without commodities. You need raw materials. Industrial stocks—right now, we're not moving into industrial stocks because of this correction, but we've got a buy list of three or four industrial stocks that we think are going to be a key player. We also have on our buy list some infrastructure stocks because when you start bringing back factories, you're going to have to rebuild the grid, strengthen the grid, improve the grid. You're going to have to increase transportation. There are a number of things that are going to go in on what I call the infrastructure side. And then the other thing is technology and AI. We've got a key technology stock that we think by the time this correction is over, we'll be able to pick it up. It'll have a three-and-a-half to four percent dividend, and that dividend will be growing at 12 to 15% a year. So it's just—it's a refocus. This gets back to an article I wrote, I think it was about six weeks ago, "Strategic Pivot." And as we outline these trends, and one of the things that we love to do, Cris, is identify a long-term trend, get on board that trend at the beginning, and ride it to completion. We did this in the '00 decade with commodities. Got out of commodities in 2011, went into dividend-paying blue-chip stocks. 2019, we started buying precious metal stocks. 2022, we started buying Bitcoin. So it's a strategic shift, and this is where the growth is going to be—the growth in income, the growth in dividends, and the growth in earnings as we reshape and rebuild and reset this economy.
Cris Sheridan:
And along those lines, Jim, I want to hearken back to many of the conversations that we've been having with our chief investment officer here on Financial Sense Newshour as well, where he began discussing late last year as the market was peaking, that we were moving to a neutral position on the stock market, raising cash, getting a little bit more defensive. And as we spoke with him even last week prior to the big downturn that we saw this week, the credit markets, as he was looking at it, were still signaling caution on the outlook for the stock market. So we've had some powder dry sitting on the sidelines to take advantage of these dips and then also picking up short-term bonds to get some yield ahead of some of the dislocations and corrections that we're looking at today. So if you would like to come on board with us at Financial Sense Wealth Management, if you'd like to speak with Jim or any of our other advisors here, feel free to give us a call at 888-486-3939. Once again, the number is 888-486-3939 or leave us a message at financialsensewealth.com.
Jim Puplava:
You know, it's rather interesting, Cris. You know, the markets go from greed to fear, and right now we're going into the fear mode. But you know, these are the things that we love in our business is to see things like this happen because we've had a shopping list of stocks that we've identified in these key areas we've been discussing here today and, but we're not ready to buy them yet because they're not at that area or that buy zone that we would feel comfortable making an investment. But it's days like the day we're doing this on a Thursday when, you know, the markets are down 1,000, 1,500 points, we look for those opportunities. And so eventually we hope that we're going to get to levels where we can pick up some of these industrial stocks. I mean, right now I think we've got 10 stocks in the bullpen we'd like to get. I'm looking at buying another key growth utility next to the one that we have. And then also we've been picking up bonds. We just picked up a five-and-three-quarter, two-year bond—you know, five and three quarters for two years. That's not a bad rate of return in this kind of market. You're almost getting 60% of the long-run return in the stock market. So you know, if you are following the markets and you invest in individual stocks and bonds, you love periods like this. I mean, I can remember, I think it was a brief period in 2020 with the COVID lockdowns where credit spreads just blew out in a six-week period, and we were able to go in and pick up six, six-and-a-half percent bonds until the Fed came in and started buying corporate bonds and ended the credit spread widening between Treasuries. But it's these kinds of events that give you the opportunity to buy something at a reasonable price.
Cris Sheridan:
And lastly, for any of you clients out there, if you're listening, just a heads-up to check your email. We sent out both a part one of a recent client-only meeting where we discussed our economic and market outlook with the investment team and then also just sent out part two on Thursday—that's April 3rd—looking at the specific stocks and holdings within our portfolios here at Financial Sense Wealth Management, making the investment rationale for why we hold these. So be sure to check your email, and if you do not see that, feel free to reach out to us again at our main office line, 888-486-3939, or you can also send us a message at financialsensewealth.com, and we can send that link directly to you.
Jim Puplava:
In the meantime, on behalf of Cris Sheridan and myself, we'd like to thank you for joining us here on the Financial Sense Newshour. Until you and I talk again, we hope you have a pleasant weekend.
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