The classic tweet from December 2018
The fear in markets is that Trump is going to hit everyone with tariffs. He's a very difficult guy to predict but I'm getting more optimistic.
1) The threats to Mexico and Canada are solvable
One of his first post-election tweets talked about 25% tariffs on Mexico and Canada, but the important detail was that he wanted action on fentanyl security and borders. That's an easy deal to make and Trump already pointed to progress in Mexico.
2) Europe
The FT today reports that Trump wants NATO countries to spend 5% of GDP on defence. That is true wartime spending with many failing to reach the NATO target of 2%. The report says however that it is not really aiming for 3 or 3.5%. If that is the trade for four years free from tariffs there is a deal to be made there, especially if those targets have long lead times.
3) China
This is the whale of the tariff war and he threatened to put a 10% tax on it because of fentanyl and I think that will happen but at this point, a 10% tax would be a relief.
More interestingly, Jim Cramer interviewed Trump and the NYSE last week and this comment was widely missed:
Well, we are going to have a lot of talks with China. We have a good relationship with China. I have an amazing relationship. Now, when the COVID came in, I cut it off. That was a step too far. That, as they say, was a bridge too far. But we've been talking and talking with President Xi, some things, and some, other world leaders, and I think we're going to do very well about tour and we are, we are frustrated as a country.
He wasn't specifically asked about taxes here but he doesn't seem like a guy who wants to go wild on taxes.
