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If you want to understand what @POTUS is doing on an international level, you need to understand ANCHORING.
In The Art of the Deal, he discusses anchoring as a negotiation tactic, though he doesn’t label it explicitly. The concept emerges in his approach to setting the tone and expectations in a deal. This revolves around starting with an aggressive or bold initial position—often a high asking price or a strong demand—to establish a psychological reference point (the "anchor") that shapes the rest of the negotiation. (When entering negotiations, it's also prudent to know your own "best alternative to a negotiated agreement" in case the deal falls apart).
He gives examples of starting with a lowball offer and framing it confidently, knowing it would set the baseline for counteroffers. The idea is to make your starting point so favorable to your side that even if you concede ground, the final deal still lands in your favor. This works because people tend to adjust their expectations based on the first number or proposal they hear, even if it’s outrageous.
A summary of the lesson is: Set a strong, ambitious opening position in negotiations to anchor the discussion in your favor, leveraging human psychology to pull the outcome closer to your goal, even after compromises. He pairs this with persistence and confidence, wherein hesitation or a weak start can undermine the anchor’s effect.
We are seeing polarizing results from this tactic, but #Argentina, #Singapore, #Israel, #Vietnam, #SouthKorea, and #Kosovo are already shifting to #ZeroTariffs - with #Japan and the #UnitedKingdom likely hot on their heels.
The main net positives?
1) Manufacturing Revival: The tariffs aim to erase the U.S. trade deficit (around $800 billion annually pre-2025) by incentivizing domestic production, and potentially adding 1-2 million manufacturing jobs by 2035.
2) Stronger Dollar and Export Leverage: For countries moving to zero tariffs on U.S. goods, American exports (e.g., agriculture, tech, energy) could flood markets unhindered. Some have projected GDP growth of 3-4% annually if trade balances shift in favor of the US.
3) Revenue Boost: If the tariffs stay in place, it will generate short-term government revenue—potentially $200-300 billion annually from the 10% baseline alone, based on rough estimates based on 2024 import volumes. If most countries lift their tariffs in response, it makes the cost of goods cheaper for US consumers; win-win.
If one adds to this that the administration, through @pulte and @SecScottBessent, plans to divest itself of assets on the "positive side" of the balance sheet, there are reasons to be quite optimistic about the ability to drastically decrease our national debt. For example, Fannie Mae and Freddie Mac ( $FNMA $FMCC) are slated for release from government conservatorship. When this happens, it will release $7.7 trillion into the U.S. GDP calculation, which does not currently include their asset valuations. Further, the US government stands to make $300 billion from the deal, with dependencies on exactly how the exit unfolds. Advisors close to the administration such as @BillAckman have poured years into producing responsible but profitable exit paths. If they are first relisted to the NYSE, the share price stands to increase exponentially as mutual funds, ETFs, and other vehicles are "forced" to buy shares to represent the indexes they match.
If ranked by asset valuation upon relisting today, Fannie Mae, with $4.3 trillion in assets, would likely be #1 in the S&P 500, edging out JPMorgan Chase. Freddie Mac, with $3.4 trillion, would rank #3, just behind JPMorgan and ahead of Bank of America. If listed by profit generation, Fannie Mae would rank in the top 25-30, with a market cap around $200-210 billion, reflecting its $17.4 billion profit. Freddie Mac would rank in the top 40-50, with a market cap around $140-150 billion, based on $12.1 billion in profit.
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