“It… is a beautiful word. One of the most beautiful words I’ve ever heard. It’s music to my ears.”
– Donald Trump
Donald Trump’s favorite word could spell chaos for the global financial order.
He used it frequently on the campaign trail, calling it “the greatest thing ever invented.”
That word? Tariff.
Trump’s fondness for it has only grown deeper since the election. In a series of tweets over the past month, he’s threatened a half dozen historic tariffs, including:
Pundits reacted with their usual alarm. They feared hyperinflation, isolationism, and a collapse of global trade. But that’s a fundamental misunderstanding of how Trump operates.
And if you want to execute the Trump Trade well, you must understand exactly how he works.
Trump Rule #1: Trump makes huge threats for easy wins
It’s always been his MO. During his first term, Trump threatened to pull out of NAFTA—then settled for a renegotiation of the agreement.
In 2018, he threatened Europe with tariffs. The European Commission promised to import more American soybeans and LNG. In return, Trump said he would “hold off on further tariffs.”
A year later, Trump announced a 5% tariff on Mexican imports, increasing by 5% every month until the border problem was fixed.