Tariffs & Protectionism: Investing Needs a New Set of Rules | Luke Gromen Explains

Summary

Luke Gromen argues that free trade and globalization are dead and that the US is shifting to Hamiltonian economics: tariffs, protectionism, reshoring, and a neutral reserve asset. He expects US fiscal dominance to force negative real rates, making gold and Bitcoin attractive, long-term Treasury bonds poor, and stocks strong in nominal dollar terms but weak in real terms. He recommends gold allocations of 5-25%, T-bill optionality, non-US equity exposure such as Japan and Germany, electrical infrastructure and industrial suppliers, and industrial metals. He also warns that expensive US AI valuations face a fiscal snake-eating-tail problem and Chinese competition.

• Defines the shift from the 'stupid Washington Consensus' to Hamiltonian economics of tariffs, protectionism, reshoring, and a neutral reserve asset.
• Argues that globalization is dead and the policy shift is as significant as Nixon closing the gold window or the Berlin Wall falling.
• Expects US debt constraints to force secularly negative real rates and continued debasement.
• Recommends physical gold allocations of 5-25% and replacing long-duration bonds with gold.
• Says long-term Treasury bonds are certificates of confiscation while T-bills/cash provide optionality.
• Suggests reducing crowded US equity weight in favor of Japan, Germany, Poland, Hungary, and emerging markets.
• Likes electrical infrastructure via GRID/PAVE and industrial names such as Eaton, Parker Hannifin, Danaher, and Illinois Tool Works.
• Warns that US AI valuations are vulnerable to heavy borrowing, fiscal strain, and cheaper Chinese competition.