Did President Donald Trump outfox the world with his tariff plan?
Maybe, according to Torsten Sløk, the chief economist at Apollo Global Management.
On Saturday, Sløk published a blog post titled “Has Trump Outsmarted Everyone On Tariffs?” In it, he explains a possible scenario in which Trump keeps tariffs below his highest threatened rates just long enough to ease uncertainty and avoid the economic pains that would come with massive tariffs.
“Maybe the strategy is to maintain 30% tariffs on China and 10% tariffs on all other countries and then give all countries 12 months to lower nontariff barriers and open up their economies to trade,” he wrote.
The post comes just before a 90-day pause on Trump’s “reciprocal tariffs” — which triggered a huge stock selloff in April — ends in early July, Fortune reports.
The pause was meant to provide the U.S. and its trade partners time to negotiate deals, though few actually materialized, at least publicly.
That said, the Trump administration has been saying for weeks that they are close to reaching deals with several unnamed trade partners.
Sløk theorized that by extending that deadline by another year, other countries and U.S. businesses would have more time to adjust to a “new world with permanently higher tariffs,” and would ease the immediate uncertainty rocking the markets.
“This would seem like a victory for the world and yet would produce $400 billion of annual revenue for U.S. taxpayers,” he wrote. “Trade partners will be happy with only 10% tariffs and U.S. tax revenue will go up. Maybe the administration has outsmarted all of us.”
Sløk previously was a critic of Trump’s tariff plan, and it does not appear that his position will change if the president continues his erratic and aggressive tariff program. But he has identified what he believes would be a way to come out on top — so long as the president is willing to play a longer game.
Trump may or may not be willing to do that. He seems to have responded negatively to the TACO nickname he’s been given by Wall Street — standing for Trump Always Chickens Out — and as a result may refuse to back off any of his proposed policies, even if it makes more sense to do so.
Sløk warned in April that a U.S. and China trade war would cripple American small businesses, and advised that providing some sense of stability would give the Federal Reserve a better view on inflation. As it stands now everyone from heads of state to small business owners are in a wait-and-see pattern, unsure of how to proceed in the choppy economic waters Trump has created.
