When it comes to imposing tariffs and immediately suspending them, Donald Trump’s behavior is downright bipolar.
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With the stock market tanking (again), Donald Trump announced on Thursday that he would (again) suspend the 25 percent tariff he imposed on Mexico… just three days after saying that there was nothing the country could do to ward off those tariffs.
When he did the same thing last month, we predicted what would happen: After trying to strong-arm Canada and Mexico, Trump would backpedal while claiming that his bullying worked and that the countries will comply with his demands.
That’s exactly what happened then, and it is what’s happening now.
Trump (again) used the pretext of fruitful negotiations with his Mexican counterpart to explain his latest flip-flop on the issue.
“After speaking with President Claudia Sheinbaum of Mexico, I have agreed that Mexico will not be required to pay Tariffs on anything that falls under the USMCA Agreement,” Trump stated.
In case you are wondering, USMCA refers to the free trade agreement that Trump himself negotiated with Mexico and Canada in 2020.
At the time, he touted it as “a colossal victory for our farmers, ranchers, energy workers, factory workers, and American workers in all 50 states and, you could almost say, beyond — because it’s all beyond.”
We’ll let you try to make sense of that last part.
When signing it, Trump called it the “largest, fairest, most balanced, and modern trade agreement ever achieved,” adding that “other countries are now looking at it, but there can’t be a border like that because, believe it or not, that is by far the biggest border anywhere in the world, in terms of economy, in terms of people. There’s nothing even close.”
We’ll let you try to make sense of that last part (again).
In any case, Trump now believes that Canada and Mexico are exploiting the agreement that he, the man who wrote The Art of the Deal, negotiated.
Psychologically, his bipolar behavior on this issue is fascinating.
On the one hand, Trump hates to feel that he is being taken advantage of, and he loves the power of being able to just impose tariffs. However, he also wants people to think that he is ushering in “the golden age of America,” and “the greatest and most successful era in the history of our country.”
And watching stocks crash just doesn’t look good when you are trying to sell Americans that narrative.
Therefore, putting in place tariffs and then immediately halting them (after pretending that the other side caved somehow) lets him appear both tough and magnanimous.
“I did this as an accommodation, and out of respect for, President Sheinbaum,” Trump stated. “Our relationship has been a very good one, and we are working hard, together, on the Border, both in terms of stopping Illegal Aliens from entering the United States and, likewise, stopping Fentanyl.”
As we pointed out earlier this week, all that talk about the border and stopping fentanyl is just a smokescreen. Trump himself has declared that the border is now safe, and in terms of Canada, it never made sense in the first place.
In the case of Mexico, the latest reversal was an easy decision because Sheinbaum adopted a “wait-and-see” approach this week.
Not Canada, which Trump has repeatedly vowed to make a US state.
Its leaders have aggressively reacted to the latest tariffs and, while Canada is a much smaller economy, it has significant leverage and can really make Americans feel the pain of Trump’s trade war (while trying to be nice about it).
And that puts an added twist to this latest debacle.
Because Trump really hates being challenged.
Our guess is that he will follow the previous playbook (again) and proclaim a victory that doesn’t exist.
And then, at the end of the month, when the president’s “I hate it when people take advantage of me” side wins out, we’ll do it all over (again).
While that seems predictable, it’s not the kind of predictability the market craves, so, ultimately, people may want to get used to those red numbers.
In his Navigating the Insanity columns, Klaus Marre provides the kind of hard-hitting, thought-provoking, and often humorous analysis you won’t find anywhere else.
