I think this is an egregious unforced error. It’s the Luka Doncic trade but $9T worse. Tariffs are the opening salvo, but I think the next phase will be competitive devaluations and currency conflict. The U.S. wants to devalue the dollar, and that’s going to have profound second-order effects on capital flows, inflation, and global financial stability. It’s hard to predict since policy has been so sporadic and brittle, but on the current path I think we’re heading into a 1970s-redux. If things don’t change, the U.S. may need a Volcker-style rate shock to reset expectations.
All that being said, anecdotally these tariffs are deeply unpopular in America. It’s abhorrent how we’re treating our allies (people from countries who I served down range with, unlike the people who are treating these countries as foes 🙄) and in general how we’re treating the world. America as a bully is not a good look. I am hopeful things will change.
As for the stock market, be fearful when people are greedy and be greedy when people are fearful