The smartest next move in the trade war...

Pres. Trump should declare victory, postpone all the tariffs, and move on.

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In the two weeks since Pres Trump’s tariff “Liberation Day,” we’ve learned a lot.

We’ve learned that Pres Trump is serious about addressing global trade imbalances.

We’ve learned that Pres Trump loves tariffs and is willing to impose them, regardless of how dumb and destructive the “smart money” thinks they are and how much pain and disruption they cause.

We’ve learned the Trump Administration’s various justifications for the tariffs and hashed them out.

We’ve learned that the vast majority of economists think the tariffs will hurt America, by increasing prices, disrupting supply chains, and reducing growth, competitiveness, and productivity.

We’ve learned what the stock and bond markets think of the tariffs (TLDR: bad).

We’ve learned that imposing big, broad tariffs suddenly and haphazardly can cause extreme disruption and pain and even threaten our financial system.

We’ve learned the Pres Trump does not want to crash our financial system (phew!).

We’ve learned that China, in particular, is willing to retaliate against tariffs.

We’ve learned that Pres Trump will meet retaliation with retaliation.

We’ve learned that many countries are eager to negotiate trade deals with the U.S.

We’ve learned that trade deals take time to negotiate — months and years — especially when you try to negotiate a whole world’s-worth at once.

We’ve learned that, in the interim, tariffs hurt U.S. businesses, workers, and consumers — the very folks they are supposed to help.

We’ve learned that trade and “re-industrialization” policies are complex, that broad-based tariffs are, at best, a blunt tool, and that rash and reactive tariff and trade decisions (like retaliations and exemptions) often have unintended consequences.

We’ve learned that the U.S. acting recklessly and irrationally causes capital to flee America, increasing our borrowing costs and reducing the value of the dollar.

We’ve learned that, if our most important goal is to improve China’s trade policies, it will be helpful to have allies.

We’ve learned that U.S. companies like Apple, which have spent decades and tens of billions of dollars building world-class global supply chains, cannot just put those supply chains on boats and ship them to America overnight. (They need years to plan and build and train and hire!)

We’ve learned that the markets do not yet believe that Pres Trump has a well-thought-out multi-faceted “4D chess” trade-and-industrial-policy plan underlying his tariff decision-making, one that will restore America’s manufacturing prowess in strategic industries and bring about a new golden age.

We’ve learned that many economists think implementing tariffs now will cause a recession, which will come with the usual layoffs, losses, anxiety, and pain.

In other words, we’ve learned a lot!

Some of what we’ve learned supports views on all sides of what we might call the Great Real-Time Tariff Experiment.

And, importantly, Pres Trump has already accomplished much of what he set out to do on “Liberation Day.”

But, while we wait for the tariff deals to be negotiated — and for Pres Trump or China to swerve and end a dangerous and mutually harmful game of chicken — the economy, consumers, investors, and businesses (including small businesses and manufacturers) are getting needlessly hurt.

So the question is… what’s the best next move?

Here’s the answer:

Pres Trump should declare victory and postpone all tariffs — including those with China — for 6 or 12 months.

If Pres Trump does this, the pain and disruption of the tariffs will instantly cease.

The stock market will jump at least 10%-15%.

Interest rates will drop, reducing America’s borrowing costs, mortgage costs, credit-card costs, etc.

Prices will stay where they are instead of leaping higher, saving American consumers and companies — including Trump voters — hundreds of billions of dollars.

American companies and trading partners will know that the President of the United States loves tariffs and is bold and aggressive enough to use them.

Pres Trump’s reputation as a business genius and master negotiator will be restored.

Pres Trump’s reputation for strategic toughness will be restored.

Pres Trump will have a steady stream of trade-talk victories to brag about for months and years — as well as potential tariffs to bludgeon any recalcitrant negotiators with.

Once the major, simpler trade deals are done, America and its friends can work on the China imbalances together, which will be more persuasive and effective than America doing it alone.

Pres Trump can put a colossal gilded Trump Tariff Trophy in the Oval Office trophy case and focus on other battles.

Life — and trade — in our modern global world can go on.

But, wait! If Pres Trump takes that step, won’t “liberal media” and economists say that he “caved” or “blinked” and that he actually hasn’t done anything other than act rashly and hurt people? Of course. But so what? Most Trump supporters don’t read or watch liberal media, and they think economists are out-of-touch elites. They’ll also be glad that someone finally did something to address the very real pain globalism and innovation and disruption have caused them. And we’ll all continue our golden age now instead of later, which is smart! So, really, who cares?).

So, that’s the best next step in the trade war.

Will Pres Trump take it?

Let’s hope so!

In the meantime, in case he doesn’t, in the next post, we’ll play out Trump’s Game of Tariff Chicken and discuss the likeliest outcomes.

Thank you for reading and subscribing to Regenerator! We’re the publication for people who want to build a better future. We analyze the most important questions in the innovation economy — tech, business, markets, policy, culture, and ideas. This is our “alpha” edition, and we’re thrilled to have you aboard!

For now, Regenerator is just me, Henry Blodget. I’m an analyst, journalist, and founder. You can read more about me here. And you can email me at hblodget@regenerator1.com. My mind and inbox are always open!