Several clients have recently expressed concern over new tariffs possibly setting off a trade war. I don’t think so. The market has generally shrugged, but downside has mostly persisted since the tariff enactment and rhetoric are both ratcheting higher.
These events give me little concern. The reason is that while I don’t know President Trump, I do see a pattern in how he deals with people. He is bombastic. He is aggressive and stern, leaving weaker adversaries with no choice but to renegotiate. This pattern has already yielded tax reform and the seeming denuclearization of North Korea; pursuits abandoned as “impossible” by several past administrations. I have no doubt he will retreat on tariffs once he has gained ground on the trade rules he seeks.
These actions seem to be part of what makes him so scary to those who oppose him. Love him or hate him, let’s face a few facts. Politicians want to be liked. President Trump just wants to win. His willingness to be disliked makes him difficult to “be played”. His grandiloquent style and disruption of the status quo bring forth fear and ire in those who oppose him, both here and abroad. Oppositional bluster from our adversaries no longer works. I can see why he’s scary.
I am prepared for the level of angst to notch higher since our trading partners will be reticent to give up the vast amounts of ground they have gained in recent decades. After that, I fully expect a truce, with the equilibrium line having been redrawn to our advantage.
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