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Mike Johnson, Speaker of the House of Representatives, believes that trusting in Donald Trump’s instincts is necessary, although his caucus might consider distancing themselves. The Republican Party can no longer be considered a typical political party, as their support for Trump has become fundamental. However, they might play a supportive role by guiding Trump carefully, as their actions have significant implications for the global economy and the future of American retirement funds.
The challenge lies in Trump’s perspective that he continues to succeed despite adversity. From the 2011 conspiracy regarding Barack Obama’s birth to his anticipated 2024 criminal conviction, Trump has repeatedly managed to revive his political career. Trump’s self-perception as a consistent victor contributes to his actions, and he is unlikely to be deterred by market fluctuations.
Trump is viewed as someone who confronts challenges decisively, considering the world and parts of America as obstacles to be dealt with. It is curious that Trump supporters, including prominent figures like New York hedge fund manager Bill Ackman, express surprise over Trump’s global tariff pursuits, despite his consistent campaign promises to engage in trade wars.
Since the mid-1980s, Trump has blamed foreign nations, particularly allies, for exploiting America. His distrust even extends to his closest allies, as evidenced by his estate settlement dealings with his siblings. It is perplexing why so many people, from fellow billionaires to Venezuelans in Florida, fail to recognize Trump’s true nature. Many accuse individuals of suffering from Trump Derangement Syndrome (TDS) wrongly. The real TDS manifests in those who mistakenly see Trump as a rational actor rather than a person driven by personal impulses.
The financial markets also appear to misunderstand Trump’s approach. A false report suggesting Trump would suspend his tariffs caused the markets to recover initially, only for those gains to be lost when the White House denied the report. Such reactions indicate that Trump’s unpredictability greatly influences global markets, where the mere suggestion of rational behavior can cause significant market shifts.
There may come a point when Trump is forced to pause some of his controversial duties, prompting market relief and surges. However, any pause would only be temporary, much like driftwood adrift. The same applies to potential tariff increases on China. Markets are likely to respond positively to potential trade deals with countries such as Japan, China, and India, although these agreements are often made between Trump and foreign governments rather than Trump’s administration.
The prevailing belief that Trump’s impact is limited to the trade sector is wishful thinking, as foreign ownership of U.S. Treasury debt plays a critical role. European governments seem to possess a better understanding compared to the markets, choosing only mild retaliations instead of escalating the trade war, to avoid destabilizing the global financial system.
Overall, the situation reveals a delayed learning opportunity. Those attempting to sanitize Trump’s decisions have diminished their credibility. Trump’s actions cannot be rationalized through conventional foreign policy or trade theories. Understanding Trump’s psychology is essential when assessing future outcomes, and until Trump remains influential, maintaining a cautious economic outlook toward America is advisable.
