And what if tariffs weren’t just a trade weapon… but also a financial lever?

That’s the hypothesis some economists have put forward regarding Donald Trump’s strategy during his presidency. Hang on tight—we’re going to break it all down together in simple terms with a few concrete examples.

1. What exactly are tariffs?

They are taxes imposed on products imported from another country. For example, if the United States levies a 25% tariff on Chinese steel, it makes that steel more expensive for an American company to purchase.

Trump significantly increased these tariffs, especially against #China, claiming he wanted to protect American industry. But some believe he also had a more subtle economic goal in mind…

2. More taxes = more money for the government

Imagine the government collecting billions of dollars thanks to these new tariffs. The result? It has higher tax revenues without needing to raise taxes on citizens. It’s like the state has discovered a new piggy bank without poking the average American’s wallet.

3. Borrow less, or borrow at a better rate?

When the government has more money in the treasury, it can either reduce its debt, borrow less, or negotiate better interest rates.

This is where another player steps in: the Federal Reserve (the Fed), which sets the interest rate levels. If the economy slows down due to the tariffs (which is sometimes intentional), the Fed may decide to lower interest rates to jump-start the economy.

Example: A trade war weakens growth? The Fed reacts by cutting rates to support the economy. Result: the government can finance its operations at a lower cost.

4. A risky bet… but a strategic one

Some see this strategy as a form of “economic tug-of-war”:

We tax imports (immediate revenue)

We deliberately dampen growth a bit

We push the Fed to lower rates (stimulating the economy and reducing financing costs)

It’s a bit like stretching an elastic… hoping it snaps back at just the right moment without breaking.

5. And what about consumers?

The downside is that prices for some imported products go up. So, businesses and households might suffer in the short term. And if the trade war lasts too long, it can harm the real economy.

A double-edged strategy

What some describe as an economic gamble is not without its risks. Yet the idea that tariffs can indirectly influence monetary policy and ease the burden of public debt is worth exploring.

Whether you agree with the approach or not, one thing is certain: Trump redefined the rules of the game between trade, public debt, and interest rates.

So, what do you think of this strategy? A tactical genius or a ticking time bomb? Let’s discuss!

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