What If Trump Is Right?

It’s Tuesday lunch, and all morning the markets have been drowning in a sea of red thanks to Trump’s tariffs.

Investors are freaking out.

But as my RM’s hit the pavement for my midday walk, I get this deep, unshakeable, hunch…

“What if?”

This is why my tummy turned…

A month ago when Trump first threatened Canada, China and Mexico with tariffs, Rupert Murdoch and a heap of big-swinging capitalists labelled it the dumbest idea in history.

But what if, against all conventional wisdom, it was a stroke of brilliance?

Because here’s the problem…

The U.S. is teetering on the edge of economic collapse, burdened by an eye-watering $36,000,000,000,000 (trillion) of government debt

Not only is it choking on its own repayments, but it needs to refinance that debt by the end of 2025.

The problem is, they don’t have the cashflow to meet the repayments.

It would be like you trying to refinance a $1m mortgage on a part-time income at McDonald’s.

And this is where Trumps tariffs could have a silver lining…

Everyone agrees his tariffs will push the U.S. economy into a deep recession.

And if that happens, the stock market will free fall causing the economy to contract further.

But by forcing the economy into the recession it needs to have, Trump could set the stage for something critical – a major drop in interest rates.

Ka-ching!

The U.S. could refinance it’s $36 trillion debt at a much lower rate.

But don’t be fooled, this will only reduce their interest costs, it won’t reduce their debt levels.

To achieve this, Trump and his Tesla co-driver will have to break a lot more furniture – slash wasteful spending, turn off the money printer, renegotiate lop-sided trade agreements, and more.

Unfortunately, the US economy is racing towards a very hazardous intersection, and the lights are flashing red.

Simply put, the only thing worse than tariffs would be no tariffs at all.

Meaning, without a tariff induced recession, the U.S. would be forced to refinance at much higher rates – digging the hole even deeper.

Therefore, by year end interest rates could be at a very binary level – much higher or much lower.

The air waves have been full of tariff talk recently, and understandably so.

But mark my words, America’s Everest-like debt problems will soon put tariffs in the shade.

My tummy told me so.

Have a great weekend!

Adam

Back paddock – you’re better to be a warrior in the garden than a gardener at war – Jordan Pieterson