Tariffs – The Aftermath
Investment Conclusion.
We are far from done with volatility from Tariffs and Trade. The use of S.122 of the Trade Act 1974 is illegal in my judgement. It is also unfit for purpose as a policy to “correct” the US trade deficit. This leaves only one purpose: to raise fiscal money. And that is already deemed illegal under the Supreme Court IEEPA ruling.
And to cap it all, S.122 will have to be replaced within 155 days. So, there will be an immediate scramble to find alternatives all - of which are more lethal in terms of the tariff powers granted to the Executive.
Moreover, the money collected illegally under S.122 and the IEEPA will have to be repaid and could amount to 14% of the already bloated US$1.7trn budget deficit.
All of this from S.122, to new tariffs to replace S.122 in 155 days and the damage and reimbursements caused by the illegal use of IEEPA and now S.122 is going to be fought out in the courts to the detriment of the Executive's reputation and credibility.
If that is a recipe for peace well, I’ll be damned! It looks more like an accelerating drift towards illegality by the Trump2 Administration.
I remain short US assets and the currency – not only because of tariff policy but also because of the deflating bubble of AI and household credit.
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