It's hard in my heart, but my mind cannot be confused

Written in advance: In the past few days, $XTALPI(02228.HK)$Tesla(TSLA.US)$Coinbase(COIN.US)$Robinhood(HOOD.US) whatever I buy drops, whatever I hold drops, my heart is definitely suffering. But in the world, who doesn't get their shoes wet? One must keep a clear mind. Just now, while exercising in the gym, I thought of several questions regarding the tariff war initiated by the Trump Administration, as follows:

Is it feasible for the Trump Administration to promote the return of manufacturing to the U.S.? What is the timeline?

Can the Trump Administration withstand sustained inflation? Is the inflation of consumer goods caused by the proposed tariffs truly a one-time event?

Even if manufacturing gradually returns, considering the time requirements, what significant relationship does it have with the Trump Administration? Can he really benefit from it? Do you believe Trump is a true patriot? He is even unwilling to pay taxes to the U.S. government.

So, what is the purpose of the Trump Administration initiating a tariff war globally and potentially collapsing the financial markets? What outcomes are reasonable to speculate?

I personally feel that we should not underestimate the wisdom of Americans, but we also cannot overestimate the incompetence of the Trump Administration. If we can clearly find answers to the above questions, I believe we will have a rough idea of what will happen next. I'm not afraid of being proven wrong; it's just a way to fill some space and earn a bit of writing fee.

I have invited the recently praised Gemeni 2.5Pro to answer, and I have also sought out a more stylish and thoughtful version of the prompt online to add to the above questions, and the response is as follows:

Alright, let's delve into these questions, striving to go beyond the surface and touch the essence Core Analytical Framework:

• Assumption of Behavioral Agents: Core actors (Trump, the U.S. government, businesses, voters, other countries) are primarily driven by their own interests, which may include power, wealth, security, status, ideology, etc. Political decisions are the result of a multi-party interest game and compromise, often mixed with contradictions between short-term considerations and long-term strategies.
• Application of First Principles:
  • Economics: Capital seeks profit, comparative advantage, globalization of division of labor, supply and demand relationships, and cost-benefit analysis are fundamental. Policy interventions can distort the market and produce unexpected consequences.
  • Politics: The primary goal is to acquire and maintain power. Policies need to serve the consolidation and expansion of the political base. Symbolic significance and narrative construction are often more important than actual effects.
  • Human Nature: Seeking benefits and avoiding harm, short-sightedness, emotionality, preference for simple narratives, tribalism (Us vs Them).

1. The Trump Administration's Push for Manufacturing to Return to the U.S.: Feasibility, Timeline, and Trump's Relationship

Feasibility:

• First Principles Examination: The global manufacturing landscape has evolved over decades based on the principles of "comparative advantage" and "cost-effectiveness." Capital and production factors will automatically flow to the places with the lowest costs and highest efficiency. Forcing a reversal of this trend requires overcoming significant economic inertia.
• Real Obstacles:
  • Costs: Labor, land, environmental protection, and compliance costs in the U.S. are much higher than in many developing countries. Even with tariffs and subsidies, the overall costs may not have an advantage.
  • Labor Force: The U.S. faces a shortage of skilled industrial workers, and the younger generation is not keen on working in manufacturing.
  • Supply Chain: Modern manufacturing relies on a highly complex, globalized supply chain network. Rebuilding a purely "Americanized" supply chain is not only costly but also time-consuming, and in many areas, it is even unrealistic.
  • Automation: Even if some manufacturing returns, it is likely to be highly automated factories, creating far fewer job opportunities than before, with limited effectiveness in addressing traditional "Rust Belt" employment issues.
• Conclusion: Large-scale, comprehensive manufacturing repatriation is economically inefficient and fraught with difficulties. What is feasible is selective and strategic repatriation, especially in areas involving national security, critical technologies, or high value-added sectors. However, expecting manufacturing to fully return to its former glory contradicts basic economic logic.

Timeline:

• Industrial transfer and supply chain restructuring is a process measured in decades, even tens of years. It involves massive investments, infrastructure construction, worker training, technological research and development, and multiple other aspects.

• A four-year presidential term is too short a time window for such a massive structural adjustment, making it difficult to see significant, fundamental results Relationship and Benefits with the Trump Administration/Trump Himself:

• Political Gains Far Exceed Economic Effectiveness: For Trump, the core value of promoting the return of manufacturing lies in its political symbolic significance and narrative ability.

  • Fulfilling Promises: Catering to his core voters (especially blue-collar workers in the "Rust Belt") who yearn for the restoration of former glory and "America First."
  • Shaping Image: Positioning himself as a "fighter" for American workers' interests, challenging the global elites who "sell out" American interests.
  • Short-term Effects: Even merely announcing a few factories returning or stopping a factory from relocating can create news hotspots, reinforcing his image of "keeping promises" and gaining short-term political points.

• Can He Truly Benefit?

  • Politically: Yes, through successful narratives and symbolic actions, he can solidify his base and boost approval ratings, even if the long-term economic effects are limited or negative. Humans (especially voters) are often more sensitive to "stories" than to "data."
  • Economically: It is difficult to see the macroeconomic benefits of large-scale returns during his term. The lagging effects of policies mean that even if there are future results, they may appear after he leaves office. Moreover, if inappropriate policies trigger trade wars and economic chaos, it could harm the economy in the short term.

2. The Trump Administration's Ability to Withstand Inflation and the One-time Issue of Tariff-induced Inflation

Ability to Withstand Inflation:

• Political Reality: Inflation, especially the rising prices of everyday consumer goods, is politically toxic. It directly undermines the purchasing power of all voters, leading to widespread dissatisfaction. Historically, high inflation has often been a significant factor in causing the ruling party to lose votes.
• Uniqueness of the Trump Administration: The Trump administration may attempt to shift the blame for inflation (e.g., blaming the Federal Reserve, previous administrations, or foreign entities) and use other policy benefits (such as tax cuts, job growth— even if low-quality jobs) to offset it. However, sustained, significant inflation is a political cost that any U.S. government would find difficult to bear in the long term. The government may be forced to make painful choices between "controlling inflation" and "maintaining tariffs."
• First Principles: Voter behavior is largely driven by their "wallet feelings." Sustained inflation directly worsens this feeling.

Is Tariff-induced Inflation of Consumer Goods a One-time Issue?

• Not a One-time Issue. This viewpoint oversimplifies the matter.
• Direct Effects: Tariffs are taxes levied on imported goods, and this cost is typically passed on to consumers by importers and retailers, leading to a one-time price increase.
• Indirect and Ongoing Effects:
  • Supply Chain Adjustment Costs: Companies adjusting their supply chains to avoid tariffs (seeking alternative suppliers, bringing production back home) require time and investment, and may lead to decreased efficiency; these costs will persistently be reflected in the final product prices
• Domestic substitutes price increase: The rise in import prices has provided room for domestic similar products to increase prices, even if they are not directly taxed.
• Rising costs of intermediate goods: Tariffs on imported raw materials and components will increase the production costs of downstream finished products, and this cost transmission is sustained.
• Retaliatory tariffs: Other countries imposing retaliatory tariffs on U.S. goods harm U.S. exports, affect related industries, and may indirectly push up domestic prices or suppress economic activity.
• Inflation expectations: If the market forms the expectation that "tariffs will persist and may expand," it may become self-fulfilling, leading to broader and more lasting price increases.
• Conclusion: The impact of tariffs on inflation is complex, multi-layered, and sustained, rather than a simple "one-time shock." It is more like throwing a stone into the economic system, which will create ongoing ripples.

3. Trump's Patriotism and Tax Behavior

• Is he really a true patriot?
  • Definitional issue: The definition of "patriot" is itself vague and subjective.
    • Perspective One (Supporters' view): If "patriotism" means placing "American (national/ethnic) interests" above globalism or the interests of other countries, challenging the existing international order to claim the share that America "deserves," and protecting domestic industries and workers, then Trump's words and actions ("America First," trade protectionism, questioning international treaties) can be interpreted by his supporters as strong patriotism. He has positioned himself as a representative against the internal and external forces that "betray" American interests.
    • Perspective Two (Critics' view): If "patriotism" means respecting national institutions, laws (including the spirit of tax law), democratic norms, civic responsibilities, and maintaining national reputation and soft power, then Trump's actions (questioning election results, attitude towards the judicial system, exploiting legal loopholes to evade taxes, potentially harming ally relationships) would be seen as contrary to traditional notions of patriotism.
  • Human nature and reality: Individual behavior is often a mix of multiple motivations. Trump's actions likely contain his belief in a certain form of "strength" for America (aligned with his personal values and worldview), a pursuit of power itself, considerations for personal (and family) business interests, and political calculations to win voter support. Simplifying him as "is" or "is not" a patriot may be overly reductive. His expression and connotation of "patriotism" are distinctly different from traditional political elites and highly serve his personal brand and political goals.
  • Tax behavior: Legal tax avoidance and tax evasion are different. It is common for the wealthy and large corporations to exploit complex tax laws to minimize tax liabilities, although it is controversial on moral and public responsibility grounds. Trump's reluctance to disclose his complete tax returns and reports of using various means to significantly reduce his tax liabilities indeed raise questions about his sense of responsibility as a civic role model and national leader This creates tension with its claimed image of "serving the country and the people," but from a realism perspective, maximizing one's own interests (including legal tax avoidance) is the instinct of many economic actors, which is not absolutely contradictory to whether he promotes his defined "patriotic" agenda in other areas (such as trade policy), although there is a moral conflict.

4. The True Purpose of the Trump Administration's Global Tariff War and Reasonable Speculative Outcomes

True Purpose (based on a multidimensional interpretation of human nature and realism, discarding superficial rhetoric):

• Core Driver: Political Survival and Power Consolidation.
  • Fulfillment of Campaign Promises, Consolidating the Base: Tariffs are a concrete manifestation of the "America First" and anti-globalization narrative, directly responding to the dissatisfaction and demands of its core voters (especially those affected by globalization). This is a core pillar of its political identity.
  • Creating "External Enemies" to Divert Internal Conflicts: Blaming domestic economic issues (such as the decline of manufacturing and wealth disparity) on "unfair trade" and "taking advantage" by foreigners can divert public attention, unite supporters, and cover up domestic structural problems.
  • Shaping a "Strongman" Image: By adopting confrontational and disruptive trade policies, he showcases a tough image of "daring to act" and "fighting for America," meeting some voters' expectations for strong leadership.
• Secondary/Auxiliary Purposes:
  • Negotiation Leverage ("The Art of the Deal"): Trump adheres to a "maximum pressure" negotiation strategy, using tariffs as a blunt but effective tool to force trade partners to make concessions and reach what he considers "better" (bilateral) agreements. He may not seek to completely destroy the global trading system but hopes to secure a more favorable position for the U.S. within it.
  • Industrial Policy Tool: Providing protection for domestic related industries in specific sectors (such as steel and aluminum) to gain support from these industries.
  • Personal Belief: Trump may indeed believe to some extent that the U.S. has been "losing out" in global trade and needs to correct this through tough measures. His worldview is heavily influenced by zero-sum game thinking.
• Overlooked Blind Spots: The Trump administration may underestimate the interdependence of the global economy and the backlash of the trade war, as well as the financial markets' aversion to uncertainty. It may also overestimate the ability of the U.S. to unilaterally pressure other countries to change their core interests.

Reasonable Speculative Outcomes (expanded under the MECE principle):

• Economic Aspects:
  • Increased Global Trade Costs, Decreased Efficiency: Tariffs and trade barriers hinder the flow of goods, leading to a restructuring of global supply chains (toward diversification and regionalization, with some returning to domestic), resulting in overall economic efficiency decline.
  • Increased Inflationary Pressure: As mentioned earlier, the transmission of tariff costs and supply chain adjustments bring sustained inflationary pressure.
  • Economic Growth Slowdown: Increased trade friction raises uncertainty, suppressing business investment and consumer confidence, which may drag down global and U.S. economic growth
• Specific industries benefit, most industries suffer: Protected domestic industries benefit in the short term, but industries reliant on imports and exports (such as agriculture, automotive, technology) and consumers suffer.
• Financial market level:
  • Increased volatility: The unpredictability of the trade war leads to tense market sentiment and significant increases in volatility.
  • Risk assets under pressure: Risk assets like the stock market face downward pressure, especially during escalations in trade tensions.
  • Safe-haven assets favored: Gold, the US dollar (which may strengthen in the short term due to safe-haven demand, but is influenced by economic fundamentals in the long term), and certain national bonds may benefit.
  • Possibility of "collapse": A comprehensive and uncontrolled trade war indeed has the potential to trigger severe financial market turmoil or even a crisis, especially if it coincides with other economic vulnerabilities (such as high debt and asset bubbles). However, "collapse" is not inevitable; it is more likely to result in sustained, high-intensity fluctuations and value reassessments.
• Political and international relations level:
  • Tensions in international relations: The relationship between the US and major trading partners (China, the EU, Canada, Mexico, etc.) is increasingly strained.
  • Weakening of the global governance system: The authority of multilateral trade systems like the WTO is undermined, and the spirit of global cooperation declines.
  • Changes in geopolitical landscape: This may accelerate the world's evolution towards multipolarity or factionalization (such as US-China confrontation), testing ally relationships.
  • Damage to US soft power: Unilateralism and protectionist actions harm the US's international image and leadership.
• Long-term structural changes:
  • Acceleration of supply chain regionalization/diversification: To reduce risks, companies will accelerate moving supply chains out of a single country (especially China), but the destinations are more likely to be other low-cost regions like Vietnam, Mexico, and India, rather than a large-scale return to the US.
  • Intensified technological competition: The trade war and technological decoupling reinforce each other, especially in high-tech fields.

Conclusive insights:

Trump's trade policies, including promoting the return of manufacturing and initiating tariff wars, are driven primarily by political motives, serving his unique political brand, base demands, and power logic. These policies are often based on simplified narratives and a pursuit of short-term political effects, potentially overlooking or underestimating deep economic laws, long-term consequences, and the complexities of the global system. The result is likely to be symbolic significance greater than actual effects, political gains accompanied by economic costs, and short-term disturbances triggering long-term structural adjustments. Expecting a large-scale and rapid return of manufacturing is unrealistic; the inflation brought about by tariffs is not a one-time event, and the motivations behind these actions need to be understood from multiple dimensions, including political survival, personal beliefs, and trading strategies. The ultimate outcome will be a profound and complex reshaping of the global economy and political landscape, rather than a simple "win" or "lose."

Interesting, after reading this, how do you think this "farce" will end??