Trump Reverts to Campaign Position, Plans to Impose Tariffs that Could Spark a Trade War

When President Trump met with cabinet members and others to discuss tariffs, it was reported that only three present were in favor of implementing increased tariffs. It so happens that one of those three was the president, and his is the vote that counts. So it looks like a round of increasing tariffs on selected goods imported from selected countries is on the way.

According to Axios, behind the constant media scandals, “one of the most consequential and contentious internal debates of his presidency unfolded during a tense meeting Monday in the Roosevelt Room of the White House” where with “more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they’re hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports.”

In other words, Trump – true to his campaign promises – is set to launch a global trade wars after all, one where then main country impacted would be China, however the collateral damage would extend to Canada, Mexico, Japan, Germany and the UK.

While consistent with his campaign promises, this is change from the position he took earlier in his administration, largely prompted by advisors affiliated with financial titans such as Goldman, in which he backed off his pro-tariff positions. Now they are back on the table.

What is also notable, is that this is the first time  – so far off the record – in which Trump has openly defied his Wall Street establishment advisors, while siding with the Bannon “populist” front:

In a plan pushed by Commerce Secretary Wilbur Ross, and backed by chief strategist Steve Bannon (not present at the meeting), trade policy director Peter Navarro and senior policy adviser Stephen Miller, the United States would impose tariffs on China and other big exporters of steel. Neither Mike Pence nor Jared Kushner weighed in either way.

Everyone else in the room, more than 75% of those present, were adamantly opposed, arguing it was bad economics and bad global politics. At one point, Trump was told his almost entire cabinet thought this was a bad idea. But everyone left the room believing the country is headed toward a major trade confrontation.

This is guaranteed to stir things up. And it will be an interesting set of coalitions that will both support and oppose any tariffs the president chooses to impose. Of course, this has enormous international implications as well.

And it will have implications for the financial markets. While we are definitely not a stock market advisory service, you might want to think about the following as relates to your view of the markets.

This, more than anything, should send shivers down Wall Street’s spine, because for all his bluster and outrageous media outbursts, Trump had largely been in Wall Street’s pocket so far.

Not anymore, and with Trump’s base hell bent on punishing the 1% (which includes Wall Street), if Trump indeed launches global trade war, his future decisions will become increasingly market unfriendly.

It’s going to be a heck of a summer.

Source: ZeroHedge