Trump Tariffs 101, for crypto people The US built the best and largest Ponzi in history, leveraging its post-WWII dominance to build a global economic machine of its choosing. Americans got wealthy and started consuming from abroad en masse. Foreigners would sell cheap goods to Americans, and invest all proceeds into American assets. Thus keeping interest rates low, financing US consumption and investments at the lowest possible rates, helping the US economy grow at a faster pace, and sending asset prices higher, further inflating the Ponzi. Also keeping the dollar strong, making Americans richer. This inflated Ponzi made Americans even richer, allowing them to consume more, and allowing them to use their inflated assets as collateral. And so this perfect and never ending flywheel went. Propped up by confidence in the system and perpetual inflows. But then came coronavirus, and Trump first (briefly) then Biden later oversaw public spending increase to extreme levels. The Fed fanned the flames. Inflation got out of control, and so did interest rates, sending public debt to unsustainable levels. The Fed soft landed the economy. But more was needed. A solution would have been to implement a long-term plan for diminishing public spending, deregulating, and increasing productivity by leveraging AI, where the US is king. Thus increasing growth and tax revenue while lowering debt service. Alas, Trump's "solution" is radically different. Introduce exorbitant tariffs, which is mainly a tax on consumers, so Americans would stop consuming so much, reducing trade deficits, and stopping foreigners from investing their profits into the great American Ponzi. Further exacerbated by retaliatory measures, which leads to even smaller capital inflows. Once the flows turn, a bottomless pit appears. Now US assets should trade on valuations rather than flows. And that is what we are seeing.