I find that the market is still not prepared for what Trump is going to do, always thinking he is bluffing and using tariffs as leverage.

We need to recognize a few basic logics:

1/ The U.S. government is extremely short on funds. Trump and the people behind him have realized that if the deficit continues to be this high, U.S. debt will be at risk, and consequently, the dollar will also be at risk. Therefore, they must find revenue.

2/ The path of cutting spending has basically been abandoned. The hundred-day reform of Doge will be of no use if it does not reach Congress.

3/ Collecting tariffs is an important source of revenue. A 10% tariff means $400 billion, and a 50% tariff means an additional $2 trillion in government revenue! (Of course, imports will decrease, so the actual numbers will be somewhat smaller), but this revenue is crucial for the U.S. government.

4/ At the same time, Trump also wants to cut taxes for the wealthy, which is a campaign promise to his donors that must be fulfilled.

5/ While balancing the government deficit, Trump also hopes to enhance the competitiveness of domestic manufacturing, which can be achieved through tariffs or devaluing the dollar. The problem with devaluing the dollar is that it does not help the U.S. government deficit at all. Therefore, the final solution or outcome may be a mixed model: increased tariffs + simultaneous devaluation.

6/ Whether it is increased tariffs or dollar devaluation, both are negative for the U.S. risk market, especially devaluation - the first wave of adjustment on January 20th was due to funds fleeing because of the dollar devaluation outlook described in the Mar-a-Lago agreement.

In short, abandon the fantasy and wait for a process of breaking down before rebuilding.

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