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- American Companies vs. The World: How Trade Barriers Created an Uneven Playing Field (Plus My $YMAX Discovery for Options Writers)
American Companies vs. The World: How Trade Barriers Created an Uneven Playing Field (Plus My $YMAX Discovery for Options Writers)
Why European boys dream of Mustangs, how global tariffs shaped the market, and the income ETF that's rescuing options writers during this brutal downturn.
Dissecting the Markets
April 06, 2025
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With all the discourse about tariffs occurring on cable television and social media, we have a big elephant in the room: How did America become the world’s largest customer?
That can be explained in the chart below, which shows that the US has the least trade barriers out of all the G20 nations. With fewer trade barriers, the US has been home to an abundance of cars globally. From American brands like Ford, Chevy, and Dodge to European brands like Volkswagen and Mercedes Benz to Japanese brands like Toyota and Honda to Korean brands like Hyundai and Kia to the Vietnamese brand Vinfast. America also has an abundance of other international brands in different industries like consumer products, medical devices, etc. operating in the US thanks to their lower trade barriers.
While Americans enjoy an abundance of options, American companies themselves are dealing with immense competition from the rest of the world in their home turf while also struggling to survive competing in foreign markets due to the trade barriers imposed by foreign governments. That’s why the US is imposing retaliatory tariffs to pressure other nations to reduce their trade barriers.
Some may say that American companies like Ford may not do well in those nations even if the trade barriers get removed. I think that perspective is misguided because (1) we haven’t seen how American companies would be able to perform in Europe and Asia with lower trade barriers, and (2) consumers globally love American products and wish they would be more affordable. Here is a memoir I wrote on Yahoo Finance Commonstock on my thoughts on this:
“Growing up in Silicon Valley during the post-GFC tech boom, I've met many European immigrants. Some started their own startups. Others came to work at Apple, Google, and other tech companies.
One of the big things I've noticed among them is when they moved to America, they all bought an America muscle car. Ford Mustang, Chevy Camaro, Dodge Challenger, or even a Corvette. Most of them have families of their own in the Valley, which intrigued me even more. As a young kid at the time, I asked them what inspired them to buy those vehicles instead of something like a Mercedes Benz, Tesla, BMW, etc.
They all tell me that when they were young boys growing up in Europe, they all dreamed of owning an American muscle car. In Europe, because of the trade barriers, Ford Mustangs weren't affordable to the typical middle-class family. Those who drove those vehicles tended to be wealthier. This is a stark contrast to the US, where Ford Mustangs can be considered the middle-class person's sports car. In high schools across America, you'll find a couple of high school seniors driving Ford Mustangs to school.
Just thinking about all the years where Ford had to deal with immense trade barriers just to do business in the European Union, if those trade barriers were removed, Ford would thrive in Europe. People who once saw Renault or Volkswagen as their main vehicle options would've pounced on the opportunity to get a Mustang. But that would also mean European automakers would struggle to survive as those trade barriers were the main thing keeping them alive in their home turf.
I am curious to see how the US-European Union trade war plays out. I'm guessing that the recent round of tariffs that have gone into effect will push Europe to consider lowering their trade barriers with the US. Since the US is Europe's largest customer, and since the customer tends to win in these disputes, we could see Europe lowering its trade barriers and being more friendly to US companies, which is bullish for US companies and bearish for European companies.
These are thoughts I wanted to share based on conversations I've had with people throughout many years that I find relevant during these present-day discussions on tariffs.”
As an investor who writes covered calls and cash-secured puts, these past few weeks have been brutal. I even wrote a post on it Friday evening, explaining the difficulties of being an option writer in this market, which I’ve linked below.
It’s times like this that make being an option writer difficult
A stock that you obtained after writing a cash secured put has fallen lower than your acquisition price
And it has fallen so low you can’t write weekly covered calls above your acquisition price
Then you have to
— Dissecting the Markets | See pinned tweet (@dissectmarkets)
12:40 AM • Apr 5, 2025
Many other option writers have feelings similar to mine during this market downturn. When we see the effortless weekly dividends that option ETFs like YMAX provide, we find that those ETFs provide less stress while meeting our goals of providing consistent and growing income. Using all the dividends that YMAX has paid out so far this year, which is $2.2164, and dividing it by the closing price of YMAX on January 2, 2025, which is $17.04, one would’ve gotten 13% of their money back so far this year. The stock is down 30% YTD, but because the ETF is geared toward income investors, YMAX investors don’t mind the ETF’s price fluctuations. From my own experience with writing options, YMAX has done a better job of providing income than my own option writing efforts.
For longer term oriented investors, they love the dip because they can lock in higher yields on their favorite investments. The post that I made below resonated with many investors, especially those who love SCHD VOO and other conservative investment options. Those who have little to no debt, consistent income, and have tons of disposable income and savings are able to capitalize the most on the dips.
I hope you are able to capitalize on the opportunities the market is presenting to you.
Riches aren’t made when stocks are soaring
They’re made when yields are fat and fear is high.
— Dissecting the Markets | See pinned tweet (@dissectmarkets)
1:14 AM • Apr 3, 2025