Monday's Musings: The Great Reset - Looking Beyond The Tariffs

April 7, 2025

UNDERSTAND THE METHOD TO THE MADNESS

The shock and awe from tariffs represent just one part of the Great Reset that’s being led by a President that has a once in a lifetime opportunity to transform America's standing and shape the POTUS legacy. Hampered by a failing WTO and short-term thinking that plagues the Western world, tariffs provide the biggest leverage point to both political and economic bilateral negotiations for access to the US $29 trillion economy.

Basically the WTO failed to do its job and the balance of trade has gone awry. US has minimal access as other countries enacted trade barriers that the US never responded to or addressed. This left many American industries out of global markets. While the tariffs today are focused on manufacturing at first, which is only 8% of the US economy, this administration could go after the global competency centers (GCC’s) next as they are equivalent to the outsourcing of tech like manufacturing was outsourced to China in the 1980’s.

Keep in mind, while Trump overemphasized the stock market performance in his first term, the second term is about driving down interest rates to pay down the debt at a lower cost structure. POTUS is not worried about the global stock meltdown because the prize is to drive the world to free trade by reducing tariffs and also resetting the balance of trade. The US has a lot to offer for reciprocal trade from agriculture, natural resources, energy, manufacturing, military, and tech. More importantly, this strategy is designed to contain China.

TRUMP'S SEVEN POINT STRATEGY

Think of the tariffs as one prong of a seven prong strategies with a concerted effort to achieve the macro view - a long term foundation for both America's prosperity and the world's:

1. DOGE - Fraud, waste, and abuse. Reduce government spending cut size of government.

2. Direct foreign investment 1.3T or more bringing companies back to invest in the United States

3. Tariffs - keeping fair trade out there and driving down long term tariffs. Access to US markets require a renegotiation on trade, security, tariffs, cooperation

4. Immigration - More legal and good immigration and no bad immigration

5. Tax Cuts - driving down costs of doing business

6. Regulations - reduce regulations so organizations and people can freely make more decisions

7. Interest rates - drive down the cost of borrowing and prop up the dollar

PAUSE, DON'T PANIC, ASSESS THE PROGRESS OF COUNTRY SPECIFIC DEALS, THEN ADJUST

While many will panic, expect some short term pain (6 to 8 months) but the long term gain may prove worth it. Enterprise deals that are focused on exponential efficiency will do well.

Enterprise deal flow: expect a slow down of decisions by a quarter based on country and tariff negotiations status.

interest rates: Expect a 100 to 150 basis point drop in the long run.

Inflation: Expect a continued drop in prices as demand drops

Unemployment rate: expect a short term uptick but long term this will be down as we will have shortage of scarce skills b/c of GCCs and lo immigration

Consumer spending: there will be a short bump up as panic tariff buying will increase. however, expect a stall until the details are ironed out over the next 6 months.

Consumer confidence: The Michigan Index will drop to about 45 in the next 3 months, but will grow when tax cuts are initiated and trade deals are finalized

THE BOTTOM LINE: INSIDE THE GREAT RESET

Right now the market response rests on supply chain resiliency, tax optimization, and trade deal impact. There is an uptake of trade that’s about to be tariffed but beyond that immediate fear, enterprises are waiting for certainty in the bilateral deals. Expect the progression of deals to calm markets that seek certainty and for the reset to open up new opportunities.

The UBER view is a great reset not seen since Bretton Woods. The US is using this opportunity to reset the world order at a Political, Economic, Societal, Technological, Environmental, and Legislative level. This is a once-in-a-lifetime shift that board members and business leaders must start planning for.

Applying the Constellation PESTEL futurist framework the debate can be framed on six axis. Expect to hear more from Constellation and the Executive Network in the next few months on the PESTEL model. The arguments can be framed in this manner:

Political - US vs China. The Great Powers at War
Commonsense vs Ideology.Finding balance in how outcomes are achieved.

Economic - Nationalism vs Globalism. A common wealth of self-interest emerges.
Free trade vs WTO. Changing the rules of the game.

Societal- Autonomous vs Human. Humanity’s purpose and mission in an Age of AI.
Culture of Abundance vs Culture of Scarcity. Fighting the tyranny of centralized scarcity for decentralized abundance..

Technology - Age of Internet vs Age of AI. Tectonic tech shifts will change everything.

Environment - Efficient Energy Futures vs Climate Action. Balancing sustainable models

Legislative - Oligarchy vs the People. Laws created by a few or rule by plutocracy.

Your POV

Did you blink on Tariff's or keep your calm? Are you ready for the Great Reset?

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