So far, there are three+ clusters of views on tariffs within the Trump administration:

• Howard Lutnick (Secretary of Commerce):
  • Views them as a revenue-raising measure.
  • Believes the US should not impose tariffs on items it does not produce.
• Scott Bessent (Secretary of Treasury):
  • Views tariffs as a means to a grand bargain with allies and foes alike.
  • Has said tariffs will be phased-in gradually.
• Marco Rubio (Secretary of State):
  • Views tariffs as a means to decouple from China in national-security-related areas, by both reshoring domestically and friendshoring with allies.
• (Robert Lighthizer (not in the administration – for now – but significant-enough to mention): Seeks:
  • To pressure China regarding the ‘Phase 1’ deal’s implementation.
  • To decouple in national-security-related sectors.
  • Ideally, to decouple across the board, especially in manufacturing.
  • ‘Agrees’ with Bessent on phasing tariffs -in progressively.)

As is always the case with President-elect Trump, it is very unlikely any single one of these (or other) players will completely capture his ear – making it that much more important to understand all of these actors’ nuances:

• First, a few reactions to the above views:
  • Lutnick’s focus on revenue-raising (which may also please Bessent) speaks to the ‘value’ of (potentially) including a 10-20% ‘universal’ tariff into the budget/tax package Republicans will be focused on passing in 1H2025.
    • For reasons laid out here, however, we are skeptical this will materialize.
  • Lutnick’s argument that the US should ‘obviously’ not tariff items it does not produce is noteworthy, as it is at complete odds with the Lighthizer/Rubio agenda of shielding the US from any form of Chinese leverage (particularly in times of crisis), by bringing back production capacity in areas pertaining to national security at a minimum.
  • Bessent’s ‘grand bargain’ idea is worthy of attention, but we think more likely to succeed on the ‘friends’ side (i.e. creating a friendshoring ‘bloc’ against China) than it is on the ‘foes’ side (i.e. convincing China to change by concessions).
  • Even with Lighthizer ‘out’ (for now), the Venn diagram overlap between the aforementioned views seems fairly apparent: there should be a relative consensus on:
    • Tariffs that are phased-in progressively.
    • A focus on national-security-related sectors.
    • An appetite to work with ‘friends’ rather than solely alone.
    • (Which incidentally would be line with our longstanding expectations.)
• The areas of ‘tension,’ or at least remaining interrogation, include:
  • Can the ‘friendshoring’ strategy work with Trump himself (likely) wanting to ‘go after’ allies (esp. the EU)?
  • Bessent, Rubio, and Lighthizer ‘agree’ that tariffs should be phased-in, but they do not necessarily agree on whether to repeal/cancel them if/as concessions are extracted from foes.

To be clear, the above pertains primarily – in our view – to ‘plans’ regarding China, with other countries (e.g. Mexico) facing far more ‘tactical’ threats. Our full list of tariff views includes:

• Countries can roughly be divided between:
  • Ideological targets: China, EU.
  • Transactional targets: Mexico, Asia ex-China (e.g. India, Vietnam, Japan).
• A ‘universal’ 10-20% tariff is unlikely – particularly through Congress.
• The EU is likely to be targeted by end-April at the latest (here, here).
• Mexico is likely to avoid tariffs in the early part of the presidency.
• China is likely to be targeted with a c. 10-15% tariff early (though not on day 1) and high tariffs later in the administration – but not high tariffs upfront.