What is Trump’s strategy with this MadMan tactics of Tariffs ! Lets decode the plan & risks involved:

1) US has 7 Trillion $ of Debt which it has to pay in next 6 months in 2025. If the US cannot pay then it has to get it Refinanced.

2) Certainly Trump Admin does not want it Refinanced when 10 Year yield is at 4.8%. Scott Bessent would like to see it at around 3% 10 yield for refinancing debt.

3) For that need to bring down the 10 year yield.

4) DOGE needs to cut federal spending & outlays

5) Drill Oil & get OPEC+ to boost Oil Output which would counter balance any inflation Tariffs may induce.

6) Tariffs increase volatility in the markets, the madman tactics make investors dump risky assets like Equity and shift to long term UST Bonds. As long term bonds buying increases, yields go down, while market crashes/corrects.

7) Federal Expenditure Cuts, Softening labour market during slowing economy, Inflation collapse due to bearish Crude makes the Fed Pivot to cut rates.

8) Fear of recession, de-growth, low inflation, rising unemployment, falling 10 years yields mean Fed gets room to cut Rates.

9) Fed Cuts rates, American debts get renewed at lower interest rates which reduces further issuances.

10) Bessent is aiming for 2-2.5% inflation, 3-3.5% 10 year UST yield 2.5-3.5% GDP Growth 2.75-3% Deficit/GDP 1-1.5 % Fed Funds Rate

11) Another factor which could be deflationary is Adoption of AI as it increases productivity but reduces the usage of Manpower. AI trend is Deflationary overall.

12) Thus an AI boom is on the Horizon & Deep Seek actually helps achieve those conditions. Now think what you want but these AI models were released based on NVIDIA GPUs much like Deep Seek V2 will also be.

13) Tariffs have other motives too like to re-balance trade deficit & stop currency devaluation.

14) The Twin Objective is to Re-Industrialise America & decrease the deficit.

15) Deficit part we talked about. Re-Industrialisation is done via capex but for capex cost of servicing debt needs to come down & DOGE needs to make Government leaner.

16) For Re-Industrialisation of America -

• Create Sovereign Wealth Fund & Monetise the Asset side of US Balance Sheets.

• Give tax cuts to corporates & middle class to cushion blow of markets & temporary pain.

• Nudge PVT sector to start investments & incentivize investment in America

• Cut Deficit & cost of servicing debt.

• Aim for a Mara Lago Accord to Devalue Dollar making American exports cheaper and competitive.

• Capital Controls & mandating re-investment a portion of profits in USA by American Corporates

17) However these short term pain in markets, jobs, unemployment to get DXY to weaken, 10 Year yield to come down and Fed to cut rates are frought with too many risks

• Foreign Countries retaliate US with tariffs & consumer’s suffer leading to decline in GDP growth.

• Inflation goes out of hand remains sticky due to Tariffs & Tax Cuts.

• Countries flatly refuse to co-operate to Devalue of Dollar

• A Stock market crash wiping out trillions of dollars might shake up confidence in US Economy leading to a rollback or a pause in Tariffs.

18) All this could prolong the short term pain as too many variables need to fall in line for a smooth operation to rescue American Economy

19) And if even one things misfires, it a could lead to a recession (looks less as of now) & that could blow up for Trump in Mid-Terms as he has a window of 1 year to act & act fast.

20) So kindly bear with disruption for Short Term unless Trump Admnst screws up its implementation & we all are royally fucked.

21) Meantime, Global Economies suffer along with USA, markets will stay volatile for next few months.

22) US markets will go in correction while Fed rate cuts & Tax Cuts would induce more discretionary spending good for IT sector specially opting for Adoption of AI.

23) Trump’s commerce secretary has announced that a compromise with Mexico & Canada may be found soon this comes post announcement of retaliatory tariffs by Canada, suspension of StarLink contract in Ontario and 3.4 trillion $ wipeout in S&P post announcement of Trade Tariffs.

24) Cutting Ukraine funding, withdrawing American troops, defunding International Bodies, winding up USAID, cutting down IRS manpower is all part of saving revenue, focus on re-building of US.

25) Its America First with American Exceptionalism in a bid to realise America’s Manifest Destiny by applying Monroe Doctrine.

26) The Madman tactics are securing only & only American interests for what be the costs for Europe or Global Economy. Its America First even if it means US bearing short term pain.

27) Goal is clear, America for Americans; rest can pay, invest and reside or just get out. We dont want freeloaders on our System.

28) A leaner Govt with an Industrialised America leading the Tech race as a Manufacturing power sitting in majestic isolation between two oceans.

29) The Wall Street gets to fund all sides of spectrum to hedge them against each other when it comes to Geo-Political conflicts or dispute.

30) America will build a system of security architecture in Indo-Pacific while reducing presence in Europe once peace deal with Russia is signed on Ukraine.

31) Use of Tariffs & Security Guarantee’s as tools to leverage support for American objectives from Mara Lago Accord, Devalued Dollar, Lesser Trade Barriers, Make in America.

32) And countries who dont co-operate will face fury of American might from Tariffs to Capital Controls to Secondary Sanctions to restricted access to American capital markets.

33) Russians are willing to work with USA, India is willing to strike trade deal, Europe is re-arming itself yet has different priorities i.e. Russia and Turkey unlike USA who sees China as the worthy challenger.

34) Russia is also co-operating USA in OPEC+ (Saudis) increasing Crude Output moving it towards disinflationary regime with crude lowering around 60$ per barrel.

35) Putin is also negotiating as an Mediator with Iran for USA on Nuclear Issue. A Russian military team has already reached Tehran. Even Iran doesn’t want conflagration at this moment.

36) Tariffs threats on Canada, Mexico, India, Japan, South Korea as mere negotiating tactics, announce initial ones to negotiated as commerce secretary Howard Lutnick suggested to Canadian Premier Ford.

37) India is also ready for the deal to reduce tariffs on Auto, Pharma and Agriculture sector while China has threatened to fight any war amid inducing stimulus to boost its economy and may even devalue Yuan to make Chinese exports competitive.

38) Trade Wars are not easy and rarely winnable, the only winnable strategy here is to use Chaos to negotiate better deals and reduce deficit focusing on Treasury Yield, lowering inflation and cutting interest rates.

39)This is in short Trump Playbook on #Trade, blowing hot & cold alike ! #ArtOfTheDeal

We are in for chaotic yet fascinating times. Fasten ur seatbelt’s !