Trump Tariff Taco Guideš®
As Trump once again wields the tariff stick against the EU over Greenland, the investment institution Kobeissi Letter published an article summarizing the market reactions after previous tariff disputes and provided this guide.
Trump always starts with punitive and threatening messages, which is part of his negotiation tactics. Moreover, this move works well for him. In the October confrontation with China, it ended with the signing of a new trade agreement and China lifting its rare earth export restrictions, which Trump had said were harming the U.S.
This time, the statement was released on Saturday, and market futures wonāt open until Monday night (because Monday is a federal holiday). The market reaction may include similar "emotional sell-offs," but given time to digest the news, the impact may be milder.
All of this is part of President Trumpās "tariff strategy," which we will detail below:
Tariff Strategy Handbook
In 2025, our investment strategy returns were almost double those of the S&P 500, largely because we capitalized early on asset price volatility during the trade war. Below are the specific counterstrategies weāve consistently employed:
A Comprehensive Step-by-Step Guide to Navigating Trumpās Trade Wars:
Friday: President Trump posts an ambiguous message hinting at tariffs on a specific country or industry. As uncertainty rises, markets decline. This episode began with Trump threatening tariffs on Denmark on Friday.
Later that day or shortly after (this time, Saturday): President Trump announces a massive new tariff, usually above 25%.
Saturday and Sunday: President Trump escalates tariff threats repeatedly during market closures to maximize psychological pressure.
Over the weekend: Targeted countries typically respond publicly or signal willingness to negotiate.
Sunday at 6 PM ET (this time, Monday night): Futures open, and the market reacts emotionally to tariff headlines, with futures prices dropping.
Monday and Tuesday: President Trump continues public pressure, but investors begin to realize the tariffs arenāt yet in effect and wonāt be implemented (e.g., February 1) for weeks.
Wednesday of the same week: Bottom-fishers step in, triggering a relief rally, but this momentum often fades, leading to another decline. This is usually when "smart money" starts buying.
The following weekend (~1 week later): President Trump posts that negotiations are underway and heās working with the target countryās leaders to find a solution.
Sunday at 6 PM ET that weekend: Futures open sharply higher as optimism returns, but gains fade after Mondayās spot market opening.
After Mondayās opening: Senior officials like Treasury Secretary Bessent appear on live TV to reassure investors and highlight progress in the deal.
Next 2-4 weeks: Trump administration officials at all levels continue to leak updates on the trade deal.
Finally: The trade deal is officially announced, and markets hit all-time highs.
Cycle: Repeat from Step 1.
Of course, this isnāt a 100% guaranteed roadmap, but based on our experience, almost all trade war escalations since January 2025 have followed roughly the same path.
Note: This time, President Trumpās plan to acquire Greenland is undoubtedly more ambitious than demanding China cut export controls. Thus, the execution of this strategy may take longer, but it will follow a similar sequence of events.
Timing Is Key
President Trumpās entire negotiation strategy revolves around timing and pressure. He provides a 2-3 week buffer before tariffs take effect to allow for a deal. Trumpās goal is for these tariffs never to actually take effectāhe wants a deal. This also explains why these announcements increasingly occur on weekends when markets are closed. He pushes threats to the edge. Thatās why they work: If they were ever implemented and sustained, theyād have the power to shake markets and change the world.
In the last round of trade wars with China, President Trump announced a new trade deal with China on November 1āthe very day 100% tariffs were originally set to take effect.
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