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by Rod D. Martin
April 10, 2025
Donald Trump proved my thesis right yesterday, in a move so brilliant that of course most of the pundits missed it. But he telegraphed it all along. He also wrote an entire book about it 38 years ago.
I discussed this yesterday on “Making Money with Charles Payne”. You can see the interview above. Here’s the rest of what you need to know.
Yesterday, the President got the entire world to agree not just to a 10% universal tariff on all imports into the U.S., and a U.S. decoupling from China, but to be happy, even ecstatic about it. He even engineered this in a way that is likely to make them participants in China’s isolation. And he did all of this while keeping the sword of Damocles hanging over them for the next 90 days.
How did he get 75 countries to ring his phone over the last week, begging for free trade agreements they previously eschewed? On April 2 he announced massive reciprocal tariffs — we’ll start charging you what you charge us. Even there, he held back on the amounts, giving himself room to add more. And he set an April 9 implementation date.
Whereupon the phones started ringing.
Immediately, from Brussels to Buenos Aires, the world raced to cut tariffs and strike free trade deals with Washington. Some were better than others. Israel, Argentina, and Vietnam immediately pledged to eliminate tariffs on U.S. imports altogether. The EU pledged zero tariffs on industrial goods, a concession Trump rejected as not enough. But the closer it came to Wednesday, the more countries called.
So yesterday, the President announced a 90-day pause on the new reciprocal tariffs, to allow time for substantive negotiations. Markets soared, the threat remains, and the dealmaking is about to get real.
I have been telling you for weeks: Donald Trump’s aim is not tariffs, but rather fully opening foreign markets to U.S. businesses: real free trade. His tariffs leverage the fact that we buy massively more from our trading partners than they buy from us: hence our $1.2 Trillion annual trade deficit. For the most part, their economies are export-driven. They need us more than we need them.
So asking nicely, scolding about “principles” they don’t really share, or even the occasional begging has produced nothing but the lopsided deals we’ve endured for decades. Why shouldn’t Europe charge us four times what we charge them on autos? Why shouldn’t India charge us a 100% tariff on motorcycles? What incentive do any of these countries have to open their markets to U.S. competition when not only are there no teeth in American threats, there are no threats at all?
And that’s the key point most free traders miss. Tariffs are only very rarely a tax on consumers. In the real world, they’re mostly a means to price foreign competitors out of your market altogether. If you live in Canada, maybe you’ll buy the American dairy products Canada taxes at 280%. But I have a feeling you’ll just buy Canadian. And that’s the point of the tariff.
Trump has made clear: he has no problem with “zero-zero tariffs” such as those proposed by Argentina’s Javier Milei. He has a huge problem with lopsided deals that prevent American business from competing fairly in countries that have free access to our world’s-largest consumer market. Fair’s fair. So his goal is not the tariffs themselves, but the fear of them, leading to better deals and real, not fake, free trade.
This is Reagan’s “Zero Option” all over again. Reagan deployed a large number of new nuclear weapons to Europe to counter the Soviets’ similar deployment, while proposing that all such weapons be banned. Everyone laughed, until in 1987 he achieved exactly that.
But speaking of Reagan, the 20th Century’s greatest President also used market power — specifically a huge arms race coupled with collapsing the price of energy, from which Russia derived the cash it needed to compete — to bankrupt the Soviet Union.
Trump learned the lesson. Now China is learning it.
Checkmating China is Trump’s foremost national security goal. China is a bad actor, closing its markets in countless ways, stealing U.S. intellectual property with abandon, and using the very different economics of Communism to drive Western businesses under. But it’s also a real military threat, one that vocally threatens nuclear and biological warfare a little too often. It’s building a real military. It needs money for that, just as the Soviets did.
And China walked right into Trump’s trap.
Trump’s lieutenants had made clear to every trading partner: don’t retaliate and things will turn out well. But Xi Jinping has built an entire foreign policy on being the leader who’ll stand up to Trump. When the President announced his tariffs, Xi doubled down.
Big mistake.
Trump responded to China’s retaliation by slapping them with a 125% tariff, while giving everyone else a 90-day pause. The result? China stands alone — and completely exposed. When Trump comes back, he’ll have formed a new trade bloc that opposes China together. But even if he can’t quite swing that, he’ll have decoupled the American and Chinese economies, at a time when exports are the only thing keeping China afloat.
Treasury Secretary Scott Bessent put it plainly: “This was driven by the president’s strategy. He and I had a long talk on Sunday, and this was his strategy all along.”
According to Bessent, this wasn’t just tough policy — it was calculated pressure. Says Bessent, “He goaded China into a bad position.” China chose escalation while the rest of the world chose negotiation. Now the markets are roaring back — and China is left holding the bag.
A lot of pundits are completely befuddled by the idea that Trump might be doing more than one thing at once. Add to that their certainty that everything he says is serious, and everything he does must necessarily be stupid, and their conclusions are nearly always wrong.
I’ve told you that the President has a few one-off aims beyond his primary goal, aims like isolating and defeating China, and stemming the illegal tide of fentanyl across the Canadian and Mexican borders. In January he threatened massive tariffs against both countries unless they stepped up border security. They complied, and the tariffs went away.
But don’t make the mistake the pundit class is making and confuse these two threads. They both flow logically from the same presupposition — “they need us more than we need them” — but their aims are not the same. Indeed, the latter serves as noise to obscure the former.
This is key to Trump’s entire strategy: noise. Constant confusion. Fear of possible consequences. Seemingly rash action. Risk.
He told you all of this in The Art of the Deal. Am I the only person who actually read the book?
This could not be more different than Washington’s meticulously calculated, hyper-accurate, risk-averse approach of the Cold War and post-Cold War eras. That’s a lot of why the establishment hates him. He doesn’t fit in their neat little box.
Trump is smashing the box. The emerging order is going to be better, freer, safer, richer. And a heck of a lot more honest.
You’re watching the creation in real time.
— The video at the top appeared yesterday afternoon on Fox Business’s “Making Money with Charles Payne”.
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