As usual, a very thought provoking and well reasoned analysis. Keep writing - we need your help to try and understand these crazy times.
The GOP is clearly counting on massive tarrif income to fund their huge tax cuts. The Budget Lab at Yale projects that Trump's tariffs could raise 3.1 trillion in revenues if they remain in place and imports don't fall (A big if) Congress could use these estimates to get GOP members to vote for their very pricey tax cuts. So investors hoping to see these get reduced could be in for a nasty surprise.
Another thing that is not discussed enough. These tariffs give the executive extraordinary control over the economy where the President can pick winners and losers and companies have to come to him hat in hand to see if the can get exemptions. It's the most extreme govenerment interference in the free market possible - because it all comes down to the whims of one man. So it's a way of having corporate American be supplicant to Trump. The model here is Orban's Hungary. This has nothing to do with the classic free trade liberalism that conservatives used to care about.
I have been thinking about the style of this for two reasons, too. Firstly, by doing it via executive orders, he exposes himself to the risk that the next president will simply change it back. If he wants permanent change, he should go the legislative route. I guess he felt like he can't get his ideas through Congress, or at least not fast enough. Secondly, as you said, it's not the executive's job to conduct trade policy, especially when it fundamentally changes it. Even if voters argue they voted for him to do it, it does raise questions about legitimacy.
I feel the only CEO of a company that can completely ignore Trump is Buffett. Already well diversified and company pays more taxes than any other company.
Raising cash, sir! Too many 'ifs' for me... too much uncertainty. Only taking very specific single-stock risk. At the moment, I'm sitting on 25% cash, 50% stocks (cautiously rotating from RoW into US), and 25% long duration (30-year Treasuries).
As usual, a very thought provoking and well reasoned analysis. Keep writing - we need your help to try and understand these crazy times.
The GOP is clearly counting on massive tarrif income to fund their huge tax cuts. The Budget Lab at Yale projects that Trump's tariffs could raise 3.1 trillion in revenues if they remain in place and imports don't fall (A big if) Congress could use these estimates to get GOP members to vote for their very pricey tax cuts. So investors hoping to see these get reduced could be in for a nasty surprise.
Another thing that is not discussed enough. These tariffs give the executive extraordinary control over the economy where the President can pick winners and losers and companies have to come to him hat in hand to see if the can get exemptions. It's the most extreme govenerment interference in the free market possible - because it all comes down to the whims of one man. So it's a way of having corporate American be supplicant to Trump. The model here is Orban's Hungary. This has nothing to do with the classic free trade liberalism that conservatives used to care about.
I have been thinking about the style of this for two reasons, too. Firstly, by doing it via executive orders, he exposes himself to the risk that the next president will simply change it back. If he wants permanent change, he should go the legislative route. I guess he felt like he can't get his ideas through Congress, or at least not fast enough. Secondly, as you said, it's not the executive's job to conduct trade policy, especially when it fundamentally changes it. Even if voters argue they voted for him to do it, it does raise questions about legitimacy.
Unfortunately the Legislative Branch is suffering from erectile dysfunction. 😋.
Rand Paul— stand tall!!
Here's a good take on the ideology behind this. And as you've said, it's ideology not any coherent and accepted economic theory that is driving this. I don't think the market understands this yet - these are not meant to be temporary: https://www.chathamhouse.org/2025/04/trumps-liberation-day-tariffs-are-likely-just-beginning-longer-term-vision
I feel the only CEO of a company that can completely ignore Trump is Buffett. Already well diversified and company pays more taxes than any other company.
His cash building looks very smart now. Curious if he uses the opportunity soon to go shopping.
Raising cash, sir! Too many 'ifs' for me... too much uncertainty. Only taking very specific single-stock risk. At the moment, I'm sitting on 25% cash, 50% stocks (cautiously rotating from RoW into US), and 25% long duration (30-year Treasuries).
Makes sense to me!