The worldwide ripple effects from President Donald Trump’s tariffs have been so widespread that one analyst says some in the business world fear the issue may go beyond Trump simply taking a political stand.
Thomas Lee, a managing partner and the head of research at Fundstrat Global Advisors, sent a memo Wednesday that painted a picture of the fallout from the president’s trade war. Lee wrote that he has had “many conversations” with macro fund managers who are expressing concern that those in the White House aren’t acting rationally — and who worry the tariffs go beyond politics and policy.
“Some even fear that this may not even be ideology,” Lee wrote. “A few have quietly wondered if the President might be insane.”
Lee’s report came before Trump issued an unexpected 90-day pause on tariffs Wednesday afternoon that sent markets rallying after a days of losses and volatility.
In his report, Lee said the tariffs could still go one of two ways. The first possibility is that everyone tires of a grinding trade war, sues for peace, and reaches new bilateral agreements. But Lee said that, while he still thinks this is the likely outcome, with each passing day the tariffs remain in place, the odds decrease.
The second way the trade war could go, Lee said, is that tariffs stay in place for an extended period, which results in the government effectively “freezing” the economy. Then, companies would be so pummeled by the tariffs that the “shock” to the economy would ripple, leading to a cascade of slowing economic activity and the very real risk of a recession.
Ultimately, though, Lee said there is one variable — and only one — that will determine these tariffs’ endgame:
“This path is determined by a single person, President Donald Trump.”