The End Of The World Is Just The Beginning

Or: Every New Beginning Comes From Some Other Beginning's End

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I wrote on Sunday about what we should look for to mark at turning point in Trump’s policy. What “capitulation” could look like from Trump, and what would that mean for markets.

I thought we got it yesterday with Bessent hitting the news to talk up deals and emphasize the end game of this tariff policy, but I missed a few things.

My friend

PauloMacro

pointed out in his excellent podcast with

Le Shrub

that Bessent accidentally let slip a critical piece of information.

In other words, there will be no deals for months. Months during which the markets and many businesses will have to choose to either:

1. Operate at a loss from tariffs while they wait it out

2. Pass expenses on to consumers (which, in many cases, is similar to shutting down)

3. Shut down/freeze

Businesses simply cannot operate with that level of uncertainty. It takes about 15-20 days for a container ship to cross the Atlantic, and supply lines take weeks/months/years to realign. Quickly reordering the global economy is simply impossible.

Therefore, it will grind to a halt.

We are unlikely to get an unfreezing of the world economy anytime soon, because Trump believes he holds the cards and he simply doesn’t care that what he is doing is bad for the world, the economy, or for markets.

Bessent The Red Herring

All along, Scott Bessent has been sent out to calm markets and emphasize that deals can be made and negotiations can be done. He discussed the red/yellow/green tariff system while campaigning for the job.

But Bessent is not in charge.

Since the 1980s, Trump has believed that we are being robbed in global trade. He considers trade deficits a loss.

Just yesterday, Pete Navarro penned an oped titled “Donald Trump’s Tariffs will fix a broken system,” in which he stated:

Could it be any clearer that they are not messing with the tariffs?

The End Of American Exceptionalism