My interpretation
of the four strategies adopted by Trump:
1. Reduction of corporate
taxes
2. Tariffs imposition
3. Tech war with Huawei
4. Infrastructure building
First one was done in 2018
and US stock market was bullish for a year but government deficits went up
terribly without companies moving back from other countries to the US as
calculated. This can be seen from the declining PMI. Reasons? Trump has been mercurial
and he could change his rules pretty fast. It is logical for companies to adopt
a wait-and-see stance instead of going headlong into expansion.
Imposing tariffs on so
many countries will end up US importers having to incur some costs and US
consumers the balance costs. How to make good profits? Can see that Fed Chair
will be under siege on one hand from impending recession to reduce interest
rates, but on the other hand from higher cost of imports to increase interest
rates to combat self-inflicted inflation later. How to solve this dilemma? Removing trade wars with all concerned
countries.
The Tech war has already
caused some US tech giants to retrench big numbers of workers due to the low
production caused by losing the world second m/phone maker Huawei. The worries
from US tech giants are increasing by the day after Xi Jinping announced the
new Long March – 15-year battle plan with the US.
Infrastructure building
seems to be a strategy that will not create enemies like trade wars. But where
to get the money when there is more budget deficit due to the reduction in
corporate taxes? Selling treasuries to other countries to raise funds? China
and Japan have been the two biggest supporters of US treasuries. But when they were
bullied by Trump so badly, do you think they will support the US to let Trump have
more energy and resources to bully them further?
So, Trump should know by
now that he has to stop his games of threatening faster than necessary as he
has less time, compared to Xi's new Long March, on his side due to the
preparation of his imminent presidential election campaign.
In conclusion, this can be
a golden opportunity to make money if you can catch the timing of Trump's
reversal of his trade wars, especially the huge one with China, and the tech
war with Huawei.
