After bombing Iran and make a tab in Congress, President Trump no longer wrinkles, expands. He dominated the beasts of the Middle East and those of his own party. And he got what he wanted. Paz Bordras outside (and not be dragged into an endless conflict). And the fiscal “great and beautiful law” that reduces taxes and reconfigures spending to the image and likeness of its electoral platform. Wall Street, who turned his back in April, greets him with a brand new record caravan. And the bonds -The obsession that Scott Besent, the Secretary of the Treasury, taught him in this second mandate- They are no longer prey to fright. No, they accompany the crusade. And they make it possible. Without his interested collaboration – Mutis does for the forum before the projected increase in the deficit – the fiscal package could not have been so great. Trump (and Wall Street) are in glory, after their passage, brief but intense, for hell.
However, Trump is not satisfied. He wants to take advantage of his recovery, charge revenge, resume the agenda of issues that he left pending in April and May to get out of the quagmire, and demonstrate, first of all, that he is not a chicken but a born winner. Nobility forces, He is determined to meet the platform he promised in the campaign (and that people voted). All of her, even the part that put him in trouble. And judges that it is time to redouble the offensive. Thoroughly and with a determination that nobody expected. It was commercial peace, the truce with China, and the cessation of fire between Iran and Israel (plus the tenacious chicha calm in the Ormuz Strait) that allowed the redemption of the markets and the president, in that order. However, Trump decided to reopen the fire and return to the load. Atiza again the war of tariffs, and deepens the one that never abandoned, the war with the Fed of Jerome Powell.
Tariffs: The White House is resurrected and even with more arbitrariness
Trump exploded in his hands the announcement of reciprocal tariffs, the emblem of Liberation Day, on April 2. In an emergency, already instances of Secretary Besent, a week later, Trump had to freeze his application for three months to calm the waters. On July 9, this period expired. “In 90 days there will be 90 agreements,” said Councilor Peter Navarro. But there were only two: with China and Vietnam (in discussion because Hanói understands that he agreed an 11% tariff and not 20% as Trump publish). The absence of advances in negotiation did not matter. Far from canceling reciprocal tariffs, or putting a ceiling at 30%, the level that now charges China, which is the country that disputes hegemony, the White House is resurrected in fullness. And even more arbitrariness.
Countries that the day of liberation were exempted from reciprocal lien now are not. Canada, who has a free trade agreement with the US (“The best in history,” according to Trump, his propeller), anotic of a 35%gabela. Brazil, which has a commercial deficit with the US, punished him with a 50% penalty for the legal problems of former President Jair Bolsonaro. “The active participation of Lula in the BRICs is what inclined the balance,” said Mauricio Claver Carone, Trump’s trusted man for Latin America. The bioceanic corridor project – which would unite Brazil with the Megapuerto de Chancay, built by the Chinese in Peru – will have been a sting. In fact, Peru said that it does not participate or authorize it. But, The paradox is that Brazil, except in April, would pay a higher tariff than China herself. Myanmar is an even more curious case. The US does not have diplomatic relations with the Military Board that governs it, but Trump still sent them a letter with a 40%tariff. Missive that the Asians thanked effusively, although they requested a reduction.
The story is repeated. And the elements of the farce are evident (the new 50% tariff to copper is a recipe for the deindustrialization of the US). But, wrong or not, Trump is serious. It aims to resume the conversation where it was in April, nuanced with this last minute discretion. The weekend continued to send notifications: the European Union and Mexico should pay 30% (five points more than Japan and South Korea, for example). Mexico and South Korea, are known, are signatories of free trade treaties with the US and charge minimal tariffs, or none. But Trump is without care.
Trump in search of “La Plata Grande”
“I think the tariffs have been very well received. The bag established a new record today”the president said Thursday. And that is the key. Trump does not fear any retaliation except two. If the markets react badly and with the cut -off caps as in April, the maneuver will have to be suspended. And he knows that China controls the offer of rare earths. If it is irritated, you can stop the activity in industries that are critical and force it to rewind. They are two fronts that must preserve unscathed.
Trump is dazzled by the effective collection of tariffs. Besent says that he can contribute US $ 300 billion this year, which today is an exaggeration. But it is not necessarily forward. In May the box added more than US $ 22 billion. An annualized level of 264 billion. By lracked hand, and without considering the dynamic effects of applying such imposite, it It would compensate 80% of the increase in the deficit foreseen by the approval of the fiscal package. Hence, Besent, a week ago, the imminent office of letters to a hundred countries predicted confirming the 10% tariff and that none has been seen. Trump, on the other hand, surprised with the novel claim to apply a higher indiscriminate tariff, between 15% and 20%. “La Plata Grande will enter from August 1,” the president was. That is, when this wave of innovations allegedly governs.
If it weren’t for Trump, the Fed would already have its decision made
In parallel, Trump bombards Powell’s Fed and his notion of independence. Not only is a drastic cuts of rates require, but the immediate exit of the Chairman. Officials such as the director of a federal agency -William Ablicte, head of Fannie Mae and Freddie Mac – spread versions about their imminent resignation. “I am very encouraged by” renunciation reports, “he said,” I think this will work in the right direction and the economy will fly. “ Or they accuse him of embezzlement in the refaction of the institutions of the institution, as is the case of Russell Vought, director of the Government Administration and Budget Office. Powell denied the existence of assumptions “VIP dining rooms, new marbles, special elevators, water sources or gardens on the terrace.” And he says he will continue until the end of his term in May 2026.
The Fed, Powell pointed out more than once, would have already resumed the decline in rates (which suspended in December) of not being for the rise of tariffs. And, it was clear in the minutes, which does not resist cutting them again before the end of the year. There seems to be no quorum to do so at the end of the month, except for the sung votes of the governors Waller and Bowman. September looked so far as the most appropriate date.
The arguments that Waller pours are shared, although there are differences in the timing of the action. “The tariffs will not cause persistent inflation … The Fed was in pause for six months waiting for an inflationary shock that has not arrived … a 10% tariff above all imports would not have much impact on general inflation.” The problem is that Trump redoubles the bet. The floor of the tariff can be 15% or 20%. And reciprocal tariffs are not discarded as Waller’s reasoning suggests. And there are strong sector novelties. 50% tribute in the case of copper. What will happen to the wood? How much will it govern for pharmaceutical products? 200% as Trump mentioned? What will be the final tariff structure? No one knows. Nor the president. Can Fed disregard these modifications and others on the way? Or should it be kept on guard for a longer time? If it weren’t for Trump, the Fed would already have its decision made.
Can Wall Street ignore this onslaught?
Wall Street did not altered, although on Friday he took a slight step back after the 35% tariff to Canada. The march of events from the heights imperturbable. But can you ignore this onslaught? After all, the recovery rally was the product of the Taco effect, the Trump wrinkle retreating defensive to contain the anxiety. More was collected in the execution of its toxic agenda in April and May, minors the volatility and chances of a recession. And thus strong the rebound in the bag. But, What to do with a recharged Trump that returns to the attack as if I had not learned anything? It is that the markets that knew how to discipline it at the time now encourage it with the records in the stock market and the complicity of the long rates. It would be said that Jamie Dimon, the CEO of JP Morgan, is the only voice that rises on alert. It is an unstable balance if the “deals” are delayed. Wall Street rests in its confidence in the taco effect and in the two casualties of rates that the Fed would be granted in case we have seen the worst of the tariff rise. And what Trump is saying to the screams is that neither one nor the other is not a soft nor did he give up. That is why this new chicken game mounts: if he does not wrinkle, he will force everyone else to be fried or packaged. And for the markets to call order.
Source: Ambito
