VIX is not all that spooked by this, will be interesting to see where tomorrow’s session ends up.
Still believe the end goal of tariffs is to onshore as much production and production inputs as possible before China makes a move on Taiwan in the 2027-2030 timeframe. The high tariffs on Taiwan would lend some credence to this as semiconductor production would be wiped out in the opening days of any strike campaign. Of course the administration can’t really come out and say this point-blank at the moment, but some really solid white papers have dropped recently from leading geopolitical think tanks and policy houses that pretty much say some type of action is a given before the end of the decade. The question becomes does China opt for a blockade and air strike campaign to force capitulation or escalate to an outright invasion.
Regardless, this will be a watershed moment in history when it happens. Pacific-based trade will grind to a halt, completely disrupting all aspects of the global supply chain that would make the height of COVID lockdowns look like an evening of bad gas. The global economic system will devolve into an every man for himself environment, hence tariffing everyone to get as much production/production inputs back domestically as possible before then. The more production/production inputs of critical infrastructure and goods that get on-shored before then, the better the outcome for the US economy.
Just my theory, the whole tariff strategy doesn’t make too much sense otherwise. There’s just no real point in blowing up the global economy for no reason unless it was to stave off something worse.
