The chicken example accurately describes what Donald Trump is doing with tariffs. Trump does not want to fall off the cliff, leading the US to a stagflationary crisis that would cost him votes. But does this mean he will not do something? He will do something in any case, something wins or at least leave the impression he won.

The previous summary summarizes what the Secretary of the Treasury describes as Trump’s «strategic uncertainty.» There is uncertainty about what may happen, but he will not push the car down the cliff. But how can we know that a specific movement would kill him or is not a cliff? What is ahead?

In other words, how can we understand what he will do? His slogan, «Make America Great Again,» provides some clues. Two things are making the US not that great now. The United States Government has changed from being the world creditor to the world debtor as it spends more than it collects, and—under Trump’s view—the country is reducing its level of industrialization. And tariffs are a value-added tax on foreign products (which, in the end, is paid by United States consumers) and influence the relative prices of USA-made products (even if the foreign products without tariffs could satisfy the needs of the US consumers with better quality and lower prices). However, there is a third reason why Trump uses tariffs: to show power. Even if he does not achieve collections or reindustrialization, he will be seen as a powerful politician who acts.

So if you are an investor seeking to assess the effects and the potential end of a tariff threat, you need to take into account these things, which may determine if he will jump off the cliff:

1. How much will this tariff increase the marginal collections of tariffs? As a cost, how much inflation will it create?
2. Is this tariff (most of them are not ) beneficial to stimulate the USA’s industries? Or it threatens the supply of a vital commodity. For instance, when he proposed to tax copper, if there’s a positive effect on the copper mining, this could happen in 20 years.
3. Which are the hidden concessions or agreements he may like to gain? Is he interested in freeing Bolsonaro from Tariffs? Or is there something behind?

It is essential, finally, to check all the executive orders published by the White House. Social networks are for communication, but the legal enforcement is made through Executive Orders. The Executive Orders are complex, as there may be exceptions, exceptions of the exceptions, quotations of laws, or other executive orders. AI could be beneficial in unscrambling the maze of regulations. Perhaps, it could be the case that an undervalued company under a tariff is exempted.

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