Donald Trump and his team follow economic shock therapy

Donald Trump and his team of economic advisers continue with an attempt to radically reshape the American economy of a consumption giant with a huge trade deficit for a manufacturing center.

The economic pivot, which focused on aggressive prices and significant reductions in public spending, has sent American actions in shock and has caused concerns about a potential slowdown in growth in the greatest economy in the world. But Trump has insisted in recent days that he will move forward.

The markets will go up and they will go down but, you know what, we have to rebuild our country, the president said on Tuesday.

He added later in a speech to leaders of large American companies that the samples against the largest trade partners of the Americas were designed to stimulate interior jobs and industrial production: the biggest victory is so [businesses] Libmed in our country and produce jobs. It is a bigger victory than the prices themselves, he told the round table.

White House press secretary Karoline Leavitt said the Trump administration earlier on Tuesday launched an economic transition.

The president is unshakable in his commitment to restoring American manufacturing and world domination, said Leavitt, when she promised that the America Last Globalist era ends and would be replaced by an economic program in America.

Trump has hit a group of former business leaders to lead his economic efforts. But compared to its first mandate, the new team lacks figures such as the former chief of the Goldman Sachs, Gary Cohn, and the former secretary of Treasure Steven Mnuchin to moderate the excesses of his therapy by economic shock.

Term officials have rather supported the message from the presidents that the United States may need a recession before harvesting what it claims to be the substantial advantages of Trumpomy.

Kevin Hassett, director of the National Economic Council, told CNBC on Monday that there were still many reasons to be extremely optimistic about the economy in the future and that any slowdown in the first quarter of this year was the result of the brips in the data.

Notes by the Treasury Secretary Scott Besse a former hedge fund manager initially welcomed by Wall Street as a moderating influence that the US economy would need a period of detoxification and that there was no more Trump, preventing a fall in actions also aroused concerns among investors.

Their approach is that you cannot make an omelet without breaking the eggs first, said Paul Mortimer-Lee, American economist for the National Institute for Economic and Social Research. Trump has always said that there would be pain before there was a gain. I suppose at one point, it flashes. If [stock markets] are down 20%, there will be someone to blame, someone will get the bag.

Bessent in November also supported another widely owned opinion among the Trumps economic team that Washington is to push countries with major trade surpluses with the United States to seek the realignment of Bretton Woods and dig their currency to a higher level against the dollar. If they do not, they will no longer be considered as allies and prices confronted and less security guarantees.

While Cohn was held publicly against the prices during his mandate as chief of the National Economic Council and finally resigned in March 2018 after losing a battle against steel and aluminum samples, current advisers tended to keep disagreements on private commercial policies.

The differences in approach such as the more moderate Howard Lutnicks trade secretary and the idea of ​​Bessents so that any price is gradually introduced has remained behind the scenes, even if the markets have dropped and the banks of Wall Street reduced their growth forecasts.

This made more power to Trump's loyalists such as Peter Navarro, a fervent supporter of aggressive trade policy which often had difficulty transforming its opinions into politics during the first administration.

The boom in more radical figures during the second term of the presidents contributed to transforming an initial bump of actions, in the midst of the promises of rapid tax and deregulation reductions, in a rout while investors wake up how the administrations are resolved in advance with its program.

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The uncertainty delighted by the possibility of more punitive prices on Mexico and Canada, two of the largest business partners in the USS, as well as direct debits from the EU and other traditional allies, have reduced stock market sales.

As [businesses and investors] Began to see the effects pass, they realize that these prices are really a killer, said John Llewellyn, partner at Advisers independent Economics. They work in the exact opposite direction to everything that has brought prosperity throughout the period of 80 years since the Second World War.

The climate of uncertainty surrounding the new administration also leads the markets to guess what comes then, investors reporting the potential risks of several unorthodox policies that its economic team has deposited.

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Lutnick earlier this month, said he was planning to stop public spending on the GDP calculations of trade departments to alleviate the impact of Elon Musks attempts to brake federal expenditure for American growth through technological billionaires, the so-called Ministry of Government Effectiveness.

We have seen, especially in the collapse of interior investments in China, the extent to which she can trust if people lose confidence, including in data, said Llewellyn. People think that the authorities must hide something and that, therefore, the economy must manage less well.

Speculation on the market of a so-called Mar-A-Lago Accord An idea imagined itself at the end of last year by the future president of the Trumps Council of Economic Advisers Stephen Miran to weaken the dollar has also raised concerns concerning the understanding of the administrations of the US Treasury market.

An idea that Miran proposed is his November article according to which countries put their current assets of the American government's debt in exchange for the obligations of the century and security guarantees could be considered by rating agencies as a technical defect, said Mahmood Pradhan, world leader of the macro in Amundi Asset Management.

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Some believe that the idea of ​​an agreement to weaken the dollar, which, as proposed by Miran and Bessent, would aim to reflect a previous agreement signed at Plaza Hotel in New York in 1985, is a vow in an environment where the American administration destroys its relationship not only with the markets, but also with foreign governments.

For the place [Accord] Of course, we had [James] Baker and [Ronald] Reagan and they were artists to make friends and influence people. They therefore had a lot of people on board, said Steve Hanke, professor of economics applied at Johns Hopkins University who served under the Reagan administration. I can't really think about any country now, except maybe Argentina, which is very friendly with the United States.

Hanke added: The idea of ​​bringing the gang together? I mean, can you imagine that China is accelerating?

Additional Steff Chvez report in Washington; Visualization of data by Oliver Roeder in London

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