Sorry for the long post. I spent the last few hours reading about this as its been bugging me all night and didn't feel like condensing it. I'm not a financial analyst, but do have interests.
My thoughts
They currently have a $34 Trillion national debt. And have already raised the dept ceiling to prevent defaulting. But now they have $3 Trillion debt maturing in 2025 and can’t afford a blowout in yields (increase in interest rates). A Fed bailout (aka printing money) affects the dollar’s credibility and value. So instead, they could be staging a controlled fire; using tariffs to create just enough panic to slow the economy down without torching everything and try to put the blame on foreign exporters. Trump and Musk have be saying this openly for months.
Why? Because slowing the economy reduces inflation, which tends to shift investors to seek “safe” USD assets (bonds), which increases demand for dollars.
It’s definitly not random.
The tariffs aren’t just to "look tough". They’re targeted at countries with large trade surpluses with the U.S. but especially cheap labor export models. Think China, India, Vietnam... The higher the trade imbalance, the higher the tariff based on how dependent they are on selling to the U.S. but that also hurts their adversaries who rely on exports for their GDP. Why so many? I mean, some countries I've never even heard of. I think its a smoke show required by their MAGA narative. 10% blanket is nothing and still brings something to the coffres.
Meanwhile, 77% of the U.S. economy is services which is untouchable by tariffs. Finance, tech, consulting? all safe. What’s getting hit? TVs, sneakers, cheap electronics (ie: Amazon) ; stuff that’s price elastic and won’t break the economy if it costs 20-50% more (of course middle class will freak).
What I think they are trying to accomplish
When the market cools due to tariffs, they are hoping money will move from the stock market and into U.S. Treasuries (considered “safe havens”). That demand in bonds pushes down yields (interest rates), which makes it cheaper to refinance that mountain of a debt. So yeah, tariffs raise money, but they also lower the cost of borrowing = double win.
Trump is using the nationalism speech while internally could just be his attempt to prevent an actual collapse of the USD. I'm hoping with a lot of doubt here lol cause you know... Trump. We can laugh all we want about his antics, his persona, his failed businesses. But the bottom line truth, the US can't show weakness at a time like this. Even China can't afford to see the US economy collapse as they need people with credit cards to buy their crap (even if they hold 760$ billion in US Treasury bonds).
No taxes. No money printing. No panic and hopefully no riots (this I'm curious to see how they manage this). Just controlled noise. This might be why so few Democrats are yelling. The US economy could truly be at a more fragile crossroads than we know and that doesn't help democrats either. I think Dems will wait a year before going full force as they can't do anything right now.
My conclusions
The middle class is about to get fucking squeezed - But they are going to deflect the inflation to other countries in their narrative to prevent uprising (I think this fails).
Managed inflation while maintaining a strong dollar even if it means the entire world goes into a global recession... this is going to suck for everyone and will take a long time to re-establish trust. But they don't care about that... cause USA#1 regardless. This has always been the american way, should not be a surprise.
The signs I'm looking for
- The stock market is going to take a severe hit. If you have any investments you've already been feeling the burn for over a month.
- After the hit, keep an eye on quality stocks getting hit hard by tariffs will eventually rise back (Apple, Nvidia, etc...).
- Opportunities in U.S. blue chip stocks, especially in service sectors (finance, tech, health) as they're tariff-insulated.
- Treasury yields dropping = demand rising.
- That 3$ Trillion dollar debt.
As for Canada... save your money and buy local. A lot of Canadians need that support more than they need anything from abroad right now. And let’s not forget plenty of countries showed us love when it mattered. They’re about to feel the pain too, and it’s our turn to stand by them. This is gonna hurt, but we might come out stronger if we double down on new alliances. Hopefully, the U.S. wakes up and pulls up a chair at the family table... with a damn good bottle of bourbon.
