I have a close friend who is a financial advisor. He hates what Trump is doing, probably because he makes good money off the status quo and the volatility of the past month or so pisses him off. He says “tariffs never work.” Work at what? Raising tax revenue? Perhaps, but is that the immediate goal here? No.
That said, he said he has been day-trading with his own money and turned $50k into $150k over a 2-3 weeks period. Not something he can do for his clients, but the market can be navigated with success.
This is a very intricate plan that requires multiple facets to work and is not without risks.
1. We have $9.2T of debt that must be refinanced this year. 6.5 due by June.
This debt is likely to be rolled into 10-yr bonds. We will save a lot of money every time the rate drops.
When do the yields go down? When the market is spooked.
Sweep in tariffs that cause uncertainty, money exits stocks and floods into the treasury.
This is considered a deliberate detox to cool the economy and cut finance costs (the refinance rates of the 9.2T mentioned earlier).
2. The lower rates are a big savings but not enough, the debt is still massive, the most impactful move is to massively cut the deficit.
Hello DOGE! Cutting 4B per day would shave $1T before the end of the year.
Refinancing the debt at a lower rate and cutting the deficit frees up room for Scott Bessent’s 3-3-3 plan.
Reduce the fed Budget to 3% of GDP
Achieve 3% of Real GDP Growth
Increase production by 3M barrels of oil per day.
Tariffs are the trigger for domestic industrial revival – make imports expensive, US producers step up.
But factories cannot scale up immediately, thus the short-term pain for consumers.
Enter the tax cuts to lessen the pain.
The tariffs are expected to bring $1B annually. But they are not the end goal, they are the trigger for this plan.
In the short term there will be winners and losers. Manufacturers: steel, auto, textiles will be winning, retail will be the big loser.
The reason for doing all of this now is simple. Trump has 18 months until the midterms, and there is hope that the economy will have made a big rebound before then.
The clock is ticking.
