Trump's tariff stick

Actually, watching the interview with U.S. Treasury Secretary Bessent, Trump and his fiscal policies are relatively easy to understand:
a. Core belief: The private sector allocates resources more efficiently than the government.
b. Policy goals: Reduce national debt (focusing on interest costs), lower inflation, and bring manufacturing back to the U.S.

Specific implementation methods:
a. Core measure to anchor inflation: BABY, BUMP!
The Trump administration believes there’s no need to control oil prices, as reducing supply to manipulate prices ultimately benefits oil-producing countries like the Middle East and Russia.
U.S. inflation is closely tied to oil prices, so increasing domestic oil production is key.
However, oil companies make long-cycle capital expenditure decisions. If policies aggressively promote green energy and electric vehicle adoption, oil companies won’t expand capacity. Hence, Trump’s approach was to cut subsidies for new energy vehicles.
b. Managing deficits: Shift spending/investment from government-driven to private sector-driven.
Trump’s team argues that private capital allocation is far more efficient than government spending—small government, empowered businesses.
Operationally, this means DOGE (streamlining inefficient government departments while unifying polarized opinions), aka deregulation and belt-tightening.
The U.S. fiscal deficit isn’t a revenue issue but a spending one. Expenditures like social security are rigid, leaving little room for cuts.
On revenue, the focus is cutting taxes for households and businesses, letting them allocate capital—effectively returning resource allocation power to the private sector for higher efficiency.
Only with efficiency can the economy achieve organic growth rather than inflation-driven growth.
c. Reshoring manufacturing:
From Dolphin Research’s perspective, this is strategic—building long-term national strength to create an all-round competitive edge.
Consider this hypothesis: If the future is "embodied AI" and China supplies 80% of global embodied AI manufacturing, that’s clearly not what the U.S. wants. Yet, the entire smart robotics supply chain is currently concentrated there.
Economically, reshoring also fuels domestic growth.
The Biden administration copied China’s playbook—e.g., the Inflation Reduction Act—with industry subsidies, low-interest loans (think Rivian), and EV purchase incentives.
Under small-government principles, Trump’s mantra is: "Duty is the most beautiful thing."
His tool? Punitive tariffs to narrow price gaps between domestic and imported goods.
Execution-wise, not all manufacturing returns—low-end goes to Southeast Asia/Mexico, while high-end is prioritized. But reviving a hollowed-out 60-70-year industry isn’t easy.
Note: Tariff-driven reshoring is a double-edged sword. Without boosting in-house production’s global competitiveness (especially if quality-price gaps are vast), high tariffs are needed to offset differences, risking inflationary pain.
Since reducing debt principal is nearly impossible, sovereign debt management hinges on:
a. Lowering interest costs. Long-term debt should dominate infrastructure financing, so suppressing long-bond yields is key.
Poor expectations can spike long yields even during Fed rate cuts (as seen pre-Trump—short rates fell while long yields hit records).
b. Boosting endogenous growth to reduce debt leverage.

Thus: Ramp up oil drilling to curb short-term inflation; transfer spending power to the private sector to anchor long-yield expectations; reshore manufacturing for long-term competitiveness.
The vision is sound, execution brutal. On tariffs, forget wishful thinking—if Trump’s first-term tariffs targeted China as the top rival, his second-term tariffs aim squarely at high-end reshoring. Any obstacle to that becomes a tariff target.

This time, all manufacturing powerhouses are in the crosshairs—no exceptions.