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Tariffs, Tumult, and the Three Most Likely Paths Forward: Three distinct scenarios could play out from here
Investor Place ^ | 04/12/2025 | Luke Lango

Posted on 04/12/2025 6:39:27 PM PDT by SeekAndFind

Key Takeaways:

tariffs - Tariffs, Tumult, and the Three Most Likely Paths Forward

The U.S. stock market is currently experiencing one of its worst crashes in history. And unfortunately, we’re not being dramatic.

Last Wednesday, so-called “Liberation Day” tariffs were officially announced; and the fallout was swift and brutal. On that Thursday and Friday, the S&P 500 fell more than 10% – something that has only happened five other times in the past 100 years:

What just happened was rare and meaningful. It was a moment where markets clearly said, “This trade war might actually change everything.”

But will it?

That’s the trillion-dollar question. And the honest answer is: no one knows for sure.

That’s because the wild card here isn’t just tariffs – it’s the unpredictability of the White House behind them.

One day, there’s talk of negotiations… The next, threats of 104% tariffs on China. 

For example, over the weekend, a viral post by hedge fund manager Bill Ackman that suggested a 90-day pause to calm markets gained traction. On Monday morning, stocks surged on a rumor that the White House liked that idea.

Then came the denial: “Fake news.” Tariffs are staying. 

More threats followed. The rally was erased, and stocks tanked again, sinking another 2% between Monday and Tuesday.

This administration is playing an erratic game. But our analysis suggests there are three distinct scenarios that could play out from here, each with very different implications for your money.

Let’s walk through them.

Scenario 1: Hardball Negotiation (50% Probability)

In this scenario, the tariffs are exactly what they appear to be: a negotiating tactic. Trump is trying to strong-arm America’s trading partners into better deals. Yes, it’s chaotic. But ultimately, it’s strategic.

You can see the signs of this approach:

In this world, the tariffs are leverage, not ideology. And once new deals are struck, Trump will roll them back, markets will breathe a sigh of relief, and the global economy will resume its march forward.

What happens to stocks here? We’d expect more near-term volatility; possibly more selling over the next few days or weeks. Once deals are signed, a sharp, V-shaped recovery – and a full rebound into summer – is quite possible.

In this case, the playbook is:

We think this is the most likely path forward, which is why we’re assigning it a 50% probability.

Scenario 2: Tariffs As True Protectionism (30% Probability)

Now, in this scenario, Trump’s tariff policy is not just strategy. It’s ideology.

He doesn’t just like tariffs as a negotiating chip. He genuinely believes in them as a tool to reshape America’s economy, wherein tariffs bring jobs home, protect domestic industry, and realign global trade in the U.S.’ favor.

In this version of reality, the tariffs aren’t going anywhere. The White House might make a few token deals, but the big ones – the 54% on China, 46% on Vietnam, 20% on the EU – stick around.

This is the 1970s redux… Or worse, the 1930s. Global trade slows. Supply chains freeze. Inflation spikes. Corporate earnings shrink. The Fed can’t easily help without stoking more inflation.

This scenario results in a grinding, multi-year bear market.

What works here?

What doesn’t?

This is a stagflation scenario, with slow growth, high inflation, and no easy way out.

We don’t think it’s the most likely path forward, but it’s definitely on the table. We assign this one a 30% probability.

Scenario 3: Deliberate Crash (20% Probability)

Now, this is the wildest scenario of all – but also the most intriguing.

In this version of events, Trump is playing 4D chess with the goal of forcing the Fed’s hand.

By igniting global trade chaos, tanking stock markets, and dragging the economy toward recession, the White House would be aiming to compel the Federal Reserve to cut interest rates dramatically, possibly even reintroducing quantitative easing.

Why would Trump want this?

Because if he can break the market, then rebuild it from the ground up with zero rates and full liquidity, he’ll have the mother of all recoveries heading into the next election cycle.

It’s risky and dangerous. But we are talking about Donald Trump, after all.

In this scenario, we’d expect markets to crash another 30- to 40%, causing the Fed to panic and cut rates aggressively. That would return liquidity to the markets, and stocks would bottom and go vertical.

It’s COVID Crash 2.0 but with tariffs instead of illness.

Your playbook here:

While we think this is the least likely path, it’s still worth keeping an eye on. We assign it a 20% probability.

The Final Word on Tariffs and the Path Forward

Contrary to popular belief, we’re not in the prediction business. We specialize in probability and positioning.

That means we acknowledge the uncertainty, weigh the likely paths, and get positioned to survive any scenario – and thrive in the most likely.

Right now, we believe it’s best to:

If we get visibility to trade deals or Fed intervention, then go risk-on. Until then, sit tight.

Yes, this market selloff has been violent, the headlines are unnerving, and the path forward is foggy at best.

But history is clear. The market has survived crashes, recessions, and depressions; pandemics, hyperinflation, political chaos, world wars – even trade wars.

And it rebounded every single time.

So, this is not the moment to panic sell. It’s a time to stay alert, patient, and ready… Because somewhere on the other side of this chaos will be one of the greatest buying opportunities of this decade.

We’re preparing for it right now.



TOPICS: Business/Economy; Government; Society
KEYWORDS: tariffs; trade
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1 posted on 04/12/2025 6:39:27 PM PDT by SeekAndFind
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To: SeekAndFind

Always beware the motivations of someone whose main focus is the Markets.

He will not have best interests of Main Strret in mind as tries to convince you of “truth”.


2 posted on 04/12/2025 6:49:34 PM PDT by SoConPubbie (Trump has all the right enemies, DeSantis has all the wrong friends.)
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To: SeekAndFind
A lot of ignorace in the writers post. 86% of the US ecnomy is unrelated to imports. The impact of tariffs are minor here but major to other countries. S
3 posted on 04/12/2025 6:54:47 PM PDT by central_va (I won't be reconstructed and I do not give a damn...)
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To: SeekAndFind

Ping


4 posted on 04/12/2025 7:03:18 PM PDT by alternatives?
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To: SoConPubbie

RE: Always beware the motivations of someone whose main focus is the Markets.

As of recent data, approximately 58% of U.S. families own stocks either directly or indirectly through pensions, IRAs, 401(k)s, or mutual funds. Direct ownership of stocks is less common, with only about 21% of families holding stocks directly. But still THAT’s MORE THAN HALF of Americans.

See here:

https://usafacts.org/articles/what-percentage-of-americans-own-stock/

Like it or not the markets DO affect main streeters.


5 posted on 04/12/2025 7:03:36 PM PDT by SeekAndFind
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To: SeekAndFind

Trump just exempted technology items like phones and computers from the tariffs - that changes everything - I think 7 companies on the stock exchange account for like 80% of the market … everything just changed


6 posted on 04/12/2025 7:51:03 PM PDT by 11th_VA
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To: 11th_VA

I’m willing to bet that there will be ADDITIONAL exemptions coming when Trump’s team realizes that there are other critical things that the USA cannot at this point in time, produce without years of preparation ( e.g., critical rare earth minerals ). Watch and See.

This whole BIG BANG approach where the USA tries to take on over a hundred countries simultaneously, should be NOT been executed. The incremental approach ( like what was done in his first term ) should have been the way to go.


7 posted on 04/12/2025 7:56:02 PM PDT by SeekAndFind
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To: SeekAndFind
Like it or not the markets DO affect main streeters.

Missed my point entirely, didn't you.

Let me spell it out to you in detail:L

Those, whose focus is the market, and who are heavily invested in said markets, are not to be trusted when they write articles either putting down President Trump's Tariff policies or put a negative spin on President Trump's approach without providing all the facts.

Their focus is on their investments, not Main Street.
8 posted on 04/12/2025 8:36:19 PM PDT by SoConPubbie (Trump has all the right enemies, DeSantis has all the wrong friends.)
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To: SoConPubbie

RE: Those, whose focus is the market, and who are heavily invested in said markets, are not to be trusted when they write articles either putting down President Trump’s Tariff policies

I don’t think I missed your point at all.

We CANNOT ignore the markets entirely because IT AFFECTS MOST AMERICANS. I gave you the stats. Nearly 70% of Americans have their pensions, IRA’s and retirement accounts tied to the markets ( both stocks and bonds ).

And this article is hardly critical of President Trump. I think it’s looking at the scenarios clinically.

And focusing on investments AFFECTS Main Streeters because Main Streeters DO Invest. In other words, the vast majority of them ARE INVESTORS.


9 posted on 04/12/2025 8:41:26 PM PDT by SeekAndFind
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To: SeekAndFind

Ditto - should have been more incremental


10 posted on 04/12/2025 11:06:57 PM PDT by 11th_VA
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To: central_va
86% of the US ecnomy is unrelated to imports. The impact of tariffs are minor here but major to other countries.

What a dumb statement. Ask WalMart or Apple about that. Maybe, just maybe, that's why Trump backed down again and gave Apple a special break. Ya' think?

And I'm sure you can explain why the dollar is crashing, and 10-year bonds are doing the same. Them "other countries" are telling us they don't want anything to do with our $36 trillion (and growing) debt-ridden country and the associated disaster we're barreling toward. Them tariffs we're were just pouring gasoline on a fire. Way to go Trump.

And you're trying to tell us it don't matter? Well, maybe some goofball may believe your crazy statement. I sure don't.

That road we've been kicking the can down is getting so much closer to a dead-end street.

11 posted on 04/13/2025 5:13:20 AM PDT by icclearly
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To: central_va

Also the nation on the down side of trading imbalance always benefits from the tariff. The nation on the high side loses.


12 posted on 04/13/2025 6:45:33 AM PDT by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped)
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To: icclearly

Free Traitor™ talk. You sound like every Democrat and,RINO and CNN “ANALyst”. One day.....


13 posted on 04/13/2025 7:32:34 AM PDT by central_va (I won't be reconstructed and I do not give a damn...)
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To: icclearly
I am not sure you can do basic math but I will show you some numbers on how ridiculous this fake brouhaha is over the tariff.

Total world GDP = $109 trillion/yr

Total US GDP = $27 trillion/yr

Expect revenue from increased US tariffs = $400 billion/yr.

So bird brain, tariff revenue compared to world GDP is .4/109 = .003%/yr ( a number so small it isn't even a rounding error )

Tariff revenue compared to the US GDP is .4/27 = .02% ( again not even a rounding error ) .

Numbers don't lie bird brain.

14 posted on 04/13/2025 7:41:07 AM PDT by central_va (I won't be reconstructed and I do not give a damn...)
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To: SeekAndFind

Everybody who prophecied: A correction is coming!

Got it. Did not have to wait for a Big Disaster or something that some Greta-Karen said about “7.4308630763 years from now!”


15 posted on 04/13/2025 7:50:15 AM PDT by linMcHlp
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To: central_va
Numbers don't lie bird brain.

Hey there, oh, great one. Let me tell you bout some numbers. From Trump's so-called Independence Day to last Friday....

-Dow lost over 2000 points
-Dollar fell to its lowest point in over three years
-10 yr bonds increased over 50 basis points

Them there are real numbers that affect us all. And it's just the beginning.

By the way, ask Walmart about your meaningless GDP numbers. I'm pretty sure you'll get an earful. But, again, maybe not. Trump may cave like he did on all the country tariffs or the China Apple tariffs.

16 posted on 04/13/2025 11:55:32 AM PDT by icclearly
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To: icclearly

Them there are real numbers that affect us all. And it’s just the beginning.


Did you think it was going to be all sunshine and lollipops?

There is going to be payment for all the bad decisions prior to Trump.


17 posted on 04/13/2025 11:59:33 AM PDT by PeterPrinciple (Thinking Caps are no longer being issued, but there must be a warehouse full of them somewhere)
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To: icclearly

Wow, Wall street over main street. Your aristocratic slip is showing. Spit. FOAD.


18 posted on 04/13/2025 7:24:12 PM PDT by central_va (I won't be reconstructed and I do not give a damn...)
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To: central_va
Wow, Wall street over main street. Your aristocratic slip is showing. Spit. FOAD.

In your little bitty mind, that might be one view.

Wall Street is simply the messenger telling us that this is going to be a disaster and we're heading for economic trouble -- which is NOT aristocratic.

That's like saying you get a blood test that somehow shows you have cancer, and you call the blood test the problem.

How dumb can you be??

19 posted on 04/14/2025 4:23:00 AM PDT by icclearly
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To: icclearly

Pinhead, you can only think short term, quarter by quarter. You are stupid and inane beyond belief and our enemies know this.


20 posted on 04/14/2025 5:33:41 AM PDT by central_va (I won't be reconstructed and I do not give a damn...)
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