Tariff is not an unknown factor.
Trump talked a lot about tariff during campaign and after election.
However, stock market was buoyant until recently.
The most common excuse? Investors thought tariff is just an negotiation tool that won’t be implemented.
That sounds reasonable, but actually it doesn’t make any sense.
Let me explain.
If stock market reflects the common wisdom and it doesn’t go down, then it means everyone assumes tariff threat is not that real.
Then why should the negotiation be effective?
Governments are not fools. Like in poker, if they think Trump is just bluffing, they would call.
The stock market almost sells Trump out if it doesn’t fall.
So, if US wants to be considered serious on the negotiation table, stock market must fall.
Why?
Because you need to let everyone know tariff is real. Every company needs to talk about it. Investors need to be panicking about it. When investors are really worried, they sell, even with losses.
Stock market drop is a manifesto that everybody realizes the tariff can be as real as the losses in their retirement accounts.
That’s when the “negotiation tool” is effective.