MARKET CALL: Path Of Least Resistance

President Donald Trump is on a roll. He now has 33 trade deals—with the UK, China, Vietnam, Indonesia, the Philippines, Japan, and the 27 countries that are members of the European Union (EU). The EU deal was announced today. The deals show that Trump has raised his baseline tariff to 15% from 10%. He must figure that, in addition to his other tariffs, the US should collect at least $400 billion per year in import duties (chart). If so, these revenues will significantly help reduce the federal deficit.

The countries Trump has dealt with aren't imposing a reciprocal baseline tariff. They are lowering or dropping their tariffs on selected goods imported from the US. In addition, many of them have agreed to spend more money on US exports and even on direct investments in the US. Trump stated that the EU agreed to purchase $750 billion worth of US energy and invest an additional $600 billion in the US. The White House maintains a running list of commitments made by companies and countries to invest in the US, presumably as a result of Trump's deal-making efforts. These are mostly informal verbal declarations of intent without any specified time frame.