Trumps Tariffs: An Observation

Trumps tariffs cause yields of bonds to raise sharply because the price of imported goods rise. This consequently prompts investors to demand higher returns on government bonds as inflation erodes the value of these assets - they are preempting compensation. 

In the midst of this, trade disruption impacts growth which in turn reduces tax revenues. The domestic macroeconomic impact compounded by investor apprehension means that the U.S will find it more difficult to service it's debt - a debt which will simultaneously grow as low growth necessitates the need for borrowing, this in turn pushes yields up as bond supply increases. 

The ideological component - contradictory - of capitalist austerity will then further aggravate domestic woes. Usually in this situation one might anticipate that equities grow as they constitute an alternative to bonds. However, when Trump announced his tariff increases with a smarmy conceit, this precipitated huge falls in the stock market because tariffs characteristically impact corporate free-market interests which espouse trade liberalisation. In this context they are required to absorb costs or pass them onto the consumer - this demand is lowered for items they dispense.  

In essence what we have is a situation in which bonds and equities were deemed unattractive. An unorthodox position but one that is expected with the implementation of tariffs. This at least to some extent explains why Trump reneged on the hikes. 

Speculation about intentional devaluation of the U.S currency to increase exports and reduce the trade deficit are pie in the sky. In this scenario, the likelihood is that the deficit rises as the U.S doesn't possess the productive capacity to compete, consequently the deficit rises. 

Additionally, assets and commodities transferred in dollars will act as a bulwark against devaluation - especially as members of geopolitical institutions like the BRICS have not diversified away as of yet.

Short selling might work but this is invariably a bet against the economy and makes trump look stupid if this was his raison detre, as the economy falters, de-legitimising his tenure at it's inception.