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How to understand Trump's crazy tariffs?
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The current market's expectations for Trump's tariff plan are chaotic. Is the imposition of tariffs a long-term national policy of the Trump team, or a negotiation strategy used by the negotiating party to seek benefits? If it is the former, then perhaps as many people say, this will change the global trade situation. The United States is moving towards isolationism, which is obviously unfavorable to the global economy in the long run. But if it is the latter, then perhaps the moment when the so-called reciprocal tariffs were issued on April 2 was the peak of fear in this round of trade war. The subsequent development direction is still to gradually reach a consensus between the United States and bilateral and multilateral parties as the negotiations between multiple parties progress, the panic in the market will gradually subside, and asset prices will return to their proper levels.
I think the tariffs are just his bargaining chips. The ultimate goal of his negotiations is to gain enough political achievements for himself, which may include more overseas orders, such as other countries purchasing more American goods. More local job opportunities, such as large companies investing in the United States to build factories. Reasonable suppression of competitors, such as forcing countries that attempt to sit on the fence to unite with him to further suppress China.
The asset plunge and recession expectations brought about by tariff disturbances have also put tremendous pressure on Powell, who cannot command. Trump cannot use administrative power to make the Federal Reserve cut interest rates, so what about the economy and stock market that are on the verge of collapse? Therefore, as long as he and his group can withstand the current huge pressure, when the seemingly illogical tariff demands are gradually transformed into results in negotiations, his reputation will gradually turn around. These results will be transformed into energy to further strengthen his political influence, become a reason for further expanding his power, and help the Republican Party gain an advantage in next year's mid-term elections.
Is it possible that Trump really regards tariffs as a long-term national policy and believes that tariffs can force the manufacturing industry to return, transform the current hollowing out of the U.S. manufacturing industry, and provide more jobs?
In fact, from the current perspective, less than a week after the introduction of reciprocal tariffs, with contacts with many countries, after the actual negotiation interests have been confirmed, the Trump team has begun to soften its tone on tariffs.
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