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@nftmoon
It's been 24 hours since President Trump announced a 90-day tariff delay. There's been a lot of talk about what exactly happened. Some say President Trump is playing "5D chess" and has set a clever trap for China to fall into while getting what he wants from the rest of the world. Meanwhile, there are also opinions that Trump "blinks" first and backs down. Charlie Gasparino from Fox News said he spoke to someone with inside knowledge of the matter. Whether that's true or not is unclear, but here's some of the information that's been released: - President Trump's plan is to announce tariffs on multiple countries at once on "Liberation Day." This is no secret because President Trump has been talking about it for weeks.
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- The goal is also to see how other countries react. The White House correctly predicted that most countries would be willing to negotiate and reach agreements, while a few would retaliate. It is unclear whether the White House knows exactly which countries will retaliate, but that is not the point. The strategy is to negotiate with countries that do not retaliate and increase tariffs and pressure on those that do, in this case China. - According to multiple sources and even President Trump himself, he is willing to sacrifice the stock market in the short term to achieve the goals of the tariff strategy because he believes that in the long term the market will recover. - Because the Fed refuses to lower interest rates, a falling stock market could drag down bond yields. This would benefit the US Treasury, especially since the US is refinancing $9.2 trillion in bonds this year. Higher interest rates mean higher government spending, which could wipe out any gains from President Trump's economic plan.
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According to Charlie, although the White House has an initial strategy, it is unclear whether it has a specific plan for when to sign agreements with countries willing to negotiate. President Trump has rejected offers of zero-tax exemptions from many countries, including Canada and the EU, in the hope of forcing better deals.However, such negotiations cannot happen quickly, especially at this scale, and the deadline for implementing tariffs is approaching. This has caused many countries to panic, starting to sell off US bonds to strengthen their USD reserves, in case a trade war breaks out that could limit their access to USD, or to use USD to buy back their own currencies to prevent them from losing value. Initially, many people thought that China was the country that sold US bonds in retaliation, which they did, but new reports show that other countries, including Japan, are doing the same for the reasons mentioned above.This sent bond yields soaring overnight, and that became a problem for President Trump.
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