I’m not an economist and I don’t play one on TV, so I’m not sure what to tell you about Trump’s tariff scheme. He cranks out a list of countries using some mathematical formula that creates just the right reciprocal tariffs on each, starting with a baseline 10% tariff on everyone we trade with.
Then the markets tank, analysts panic and there’s a massive sell-off. Then Trump “pauses” the tariffs for 90 days so that he can make deals with dozens of countries that reached out to the U.S. Markets skyrocket and post one of its biggest rallies in history.
First, the tariffs to every country was meant to cause the free world to make a choice – China or us. According to Scott Bessent on the White House lawn early this afternoon, north of 75 countries have chosen us. They are clamoring to renegotiate trade deals. Inevitably, every one of these deals will benefit the United States. It defies logic to believe that America’s position vis-a-vis trade with any individual country is going to be worse off after negotiating a new deal. With some countries, we’ll be nominally better off. With other countries, we’ll be in a much more equitable place. And because we have the commitment of 75+ countries to renegotiate trade, Trump is pausing the tariffs for 90-days in good faith in order to let the negotiators do their thing.
The bottom line is none of these pending trade deals would have been offered or committed to without the tariffs used as an attention-getter.
Second, by forcing the world to choose between the United States and China, China has become further isolated. Trump has all the leverage in the world to squeeze China, and squeezing them is exactly what he’s doing.
It’s high stakes gamesmanship and Trump knows exactly what he’s doing.
Trump knew all along the stock market, and the angst around it from the chattering class in resistance media was transient, and would rebound once he got us into a position of strength in global trade.
The bottom line to phase two is that all of it – phase 1 and phase 2, were a plan to take on China and combat them as the growing threat they are before having to deal with them anyway once they’re stronger and we’re weaker. This has been always about boxing in China. All of it. Yes, Canada, you, too.
I get a little nervous when playing chicken with a behemoth like China. We are dependent on China for pharmaceuticals, as we learned during Covid (released by China on purpose, I’m convinced, to take out Donald Trump). China supplies us with electrical machinery and TV parts, nuclear reactor parts and mechanical appliances, toys, games, sports equipment, plastics, furniture and lamps, vehicles, iron and steel, and optical and photographic parts, electronics, medical equipment, pharmaceutical ingredients, and, last but not least, rare earth minerals, which are crucial for industries like defense, renewable energy, and consumer electronics.
The U.S. imported $438 billion worth of goods from China in 2024 and only exported $144 billion. We’ve outsourced a lot of our manufacturing to China.
The tariffs are a tool to reset global trade and to begin diminishing the influence that China has on the world stage. They probably won’t be too happy about any negative impact that a reordered trade regime has on their Belt and Road strategy.
Both Apple and Porsche scrambled to get their products from India and Germany before the tariffs went into effect.
Since March, Tim Cook-led Apple has chartered at least six cargo jets, each carrying an estimated 100 tons of iPhones, to fly from India to the US, Reuters reported, citing sources familiar with the situation.
The tech giant also nudged Indian authorities to expedite the shipments through customs.
Apple “wanted to beat the tariff” with its last-minute shipments, a source familiar with its planning told Reuters.
In total, approximately 1.5 million iPhones were ferried to the US, according to Reuters calculations.
Meanwhile, the German luxury car brand Porsche warned analysts on Thursday that its first-quarter results would be impacted by “higher company-owned inventory shipped to the US to beat the tariff deadline.”
Trump imposed a 25% tariff on imported cars and car parts that went into effect April 3.
That levy remains in effect despite his 90-day pause on country-specific measures.
Trump is a disrupter, and I learned from his first term and from his second presidential campaign not to underestimate him, nor to panic when he does something that seems completely illogical. There’s a method to his madness, and I’ve decided to trust that his instincts are pretty good.
Besides, what choice do I have?
Have a great weekend.
