The USA has had a permanent trade deficit for over 50 years. It imports more than it exports. Why is that? Because they have focused on high-tech. While other countries have built their factories for washing machines $WHR (-1,58 %) sneakers $NKE (-0,18 %) and tractors $DE (-0,43 %) kept their factories running, the Americans preferred $MSFT (+1,32 %) , $GOOGL (-1,98 %), $NVDA (+4,72 %) and $V (-0,06 %) raised them. Technology instead of cheap production.
But: no world power can manage in the long term without industrial production. Trump now has three possible paths ahead of him:
1. introduce tariffs. Sounds like a heavy hand, but it often leads to less innovation and poorer quality because international competition is eliminated.
2. conclude trade agreements. In other words, deals that determine what is exported and imported, how much and where. More structured, but more laborious.
3. currency manipulation. Countries like Turkey or Denmark like to do this to boost their exports. For the USA, however, this is more difficult with the dollar as the world currency. If they start to manipulate it, everyone else will react too.
What is Trump doing instead? Exactly what he has always done: The big bluff.
With North Korea: threatening Rocketman as if he would flatten the whole country. Bluff.
With Gaza: the "hell on earth" rhetoric. Bluff.
With the Ukraine war: calling Zelensky a dictator and then a few days later pretending he never said anything. Bluff.
Now comes the next bluff. Against the EU. Against China. Against Jerome Powell.
He's playing the lunatic because that's how he understands the game. It worked in his reality show and it worked in the election campaign. He knows that if he goes crazy, everyone will stare at him spellbound. And that's enough for him to win. Chaos is part of his plan.
My conclusion: I won't be swayed by the fuss. I don't make investment decisions based on tweets and headlines. I'd rather take advantage of the weak dollar and keep buying
Here is also a suitable YouTube video: https://youtu.be/wIeTXYRajhw?si=NaVKDkc0xxDQtIwR
