Is Trump Really Bluffing on Tariffs?

Tit-for-tat tariffs are starting to get real, with Daimler’s profit-warning Thursday the first real blood in the water. If it’s all a bluffing strategy, how can it work when the consensus is that it’s a bluffing strategy? We’re seeing the consensus start to change on that, with clients challenging us on how we can be so sure. China must be beginning to wonder, with its equities in a bear market as US stocks recover. We take Trump’s “zero option” on tariffs seriously, and there is preliminary evidence that Europe does as well – pushed by Germany’s automakers. China would have to fold if the US and Europe presented a united front. In the meantime, tariff talk is buoying Trump’s approval ratings, and no one is talking about a “Blue Wave” in the mid-term elections anymore – he may want to drag this out a while longer.