Stock prices are still hovering near all-time highs — and that’s before factoring in the potential impact of the new tariffs.
The Shiller P/E ratio, which compares current stock prices to average long-term earnings, is around 31. Historically, this ratio averages closer to 17. To return to that level, the market would need to fall by roughly 45%, assuming corporate earnings stay flat.
But that’s a big assumption.
With rising tariffs and signs of a slowing economy, corporate profits could fall too. If earnings decline while stock prices dip only modestly, valuations could stay elevated. In other words, even if the market corrects, stocks might still be overvalued.
And remember: markets rarely crash or recover in a straight line. Instead of a quick dip and rebound, we could be looking at a slow, grinding correction that stretches through the rest of the decade — a long-overdue reset.
The lost decade – 17% return in 10 years – far below inflation
Meanwhile, the U.S. dollar has been riding high for too long. Inflation remains stubbornly elevated. Now, with Trump signaling plans to lower both inflation and the national debt, he’s pushing for lower interest rates. That makes borrowing cheaper — but it also raises the risk of a weaker dollar.
Add in the new tariff regime, and the picture becomes even more complex. China is facing a 34% reciprocal tariff, not based on what they charge the U.S., but based on their trade surplus. Steel and aluminum from Brazil and South Korea are being hit with tariffs over 25%, and even Lesotho — a small country in southern Africa — was slapped with a 50% tariff using the same formula.
This isn’t symbolic. It’s aggressive, wide-reaching policy. And less global trade ultimately means less demand for the U.S. dollar.
If the economy tips into recession, the Fed might return to money printing — putting even more pressure on the dollar’s value.
And when the dollar weakens? One asset tends to shine: Bitcoin.
With a fixed supply, no central issuer, and rising global interest, Bitcoin is increasingly seen as a hedge against inflation and currency debasement. BRICS countries are actively working to move away from the U.S. dollar in global trade — opening the door for a decentralized, neutral alternative.
Bitcoin may not be the answer for everyone. But with gold already having had a strong run, and investors losing faith in overvalued equities, the search is on for the next safe investment.
Maybe that next safe haven… is digital gold.
