US trade policy remains structurally volatile
The Trump administration's trade policy is structurally volatile because tariffs are viewed as both a primary leverage tool and an end in themselves.
The argument
The guests argued that the administration uses an 'escalate to de-escalate' strategy to build negotiating leverage. Because the administration views trade deficits as a scorecard and genuinely believes tariffs protect domestic industry, high tariff volatility is expected to persist over the next three years.
The thesis, stress-tested
✓ What validates it
- ✓New tariff announcements on key trading partners
- ✓Spikes in the VIX index tied to trade negotiations
▸ Risks discussed
- ▸Sudden policy reversals or 'climb downs' can abruptly suppress volatility
- ▸Legal challenges in courts can stall tariff implementation
Hear it yourself
"At that point, it was mostly with Japan, but he was very consistent in terms of his view that trade deficits are bad, that they're effectively a scorecard between The US and the rest of the world, that tariffs are good not only as sort of a means to an end in terms of leverage over negotiating partners, but also an end end to themselves."
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