Five questions and predictions for the second 100 days of Trump 2.0
More chaos seems like an easy and vague prediction to make.
On Inauguration Day, I sent subscribers five questions and predictions about Trump’s first 100 days. That post is not paywalled. Everyone can read it and grade me on it (I think I did quite well, but a lot of it is subjective). I considered writing a recap or a lessons learned, but then felt that would be repeating too many things I’ve already written. Instead of focusing on the past, I would rather focus on five questions and predictions for the second hundred days.
When does the region feel the economic damage of the trade war? Tariffs are big and real, but many are paused (the blanket 10% Liberation Day tariff) or awaiting further study (Section 232 tariffs on critical minerals, for example). Still, the US-China trade war is already reducing cargo flows to the US, and the impacts in the US are just beginning to be felt. I’m predicting it’s well over 50% likely the US will be in a recession before the end of the year.
Prediction: Market timing predictions are always a bad idea that I’m likely to get wrong, but I think the next 100 days feel like walking precariously on a tightrope without falling both in the US and in Latin America. Sometimes the economy teeters towards falling, sometimes it looks solid and secure. There is a big fall coming at some point, but the next 100 days are probably one of those moments the market holds out longer than I think it should, given all the risks.
Who makes trade deals with Trump? The US president says he wants to reach 75 trade deals in the next 90 days. Seems ambitious. Countries in Latin America will see this as an opportunity to negotiate or renegotiate their position with the US to give Trump the easy win and PR boost and end the uncertainty overhanging their economy, at least for a little bit.
Prediction: At least five Latin American countries strike deals with the Trump administration in the next 100 days (if I had to guess: Argentina, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guyana, Paraguay, and Peru are the most likely contenders). Meanwhile, Sheinbaum remains a savvy negotiator and Mexico remains in tariff limbo, neither facing the full force of all of Trump’s threatened tariffs nor having a clear agreement to get back to USMCA free trade.
Does Trump back off or double down on deportation controversies? Arrests are up, deportation numbers are down, but deportation controversies are through the roof. The Trump administration is struggling to hit the “mass deportation” numbers that it wants to hit due to a lack of logistics, resources and competence, but it’s great at firing up the anger and fear with media coverage of the deportations that it does. It’s using the controversies to attack critics in the US and the US judicial branch. While support for Trump’s immigration agenda, usually a strong point of his, has fallen in the polls, it still remains close enough to 50%.
Prediction: Trump doubles down on the controversies. Nothing about the legal critiques or negative polling convinces him that he should back off. He has been consistent on this issue for more than a decade, and he embraces the controversies as good for ratings. He wants the attention focused on the high profile cases, because otherwise the story will be about how the data demonstrate he is behind the pace of Biden, Obama and his own first administration. He also likes the opportunities to test the institutional checks on his power. In the event that he gives up on one case, he’ll just do something more extreme later on a different case to reassert his authority.
How does Trump respond to the BRICS conference in Brazil? Lula has largely dodged Trump’s ire over the first 100 days, but there will be a moment in July when global attention turns to Brazil as it hosts the BRICS. This is Lula’s chance to demonstrate an alternative vision for global governance that competes with the US, EU and even China. It will also be a moment in which China, India and others enter the Western Hemisphere, a location that Trump views as his own sphere of influence.
Prediction: Outrage. The BRICS conference in July or the immediate run-up to the conference in late June will be the moment that Trump’s gaze turns towards Brazil. The hint of the dedollarization plan that Lula certainly has on his agenda will be of particular concern as the roles of the US dollar and US treasury in the global economy come under greater scrutiny. China’s role in South America will be highlighted. I expect threats of tariffs and sanctions aimed at Lula and his government right around this time.
Do Venezuela sanctions aim to oust Maduro or capture the oil sector? There are two competing groups influencing the Trump administration’s Venezuela policy. The first (led by Rubio) wants to use sanctions to weaken Maduro’s economic hold on the country. The second also want sanctions and tariffs, but as I wrote in yesterday’s newsletter, “instead of sanctioning Venezuela’s oil sector into an unprofitable mess, they want to use sanctions and other pressure so the US can de facto take over Venezuela’s oil sector and control it.” It’s about a deal with Maduro that keeps the US involved in Venezuelan oil and keeps China and Russia out.
Prediction: There will be greater sanctions and “secondary tariffs” related to Venezuelan oil in the coming 100 days. However, like the economic prediction, this policy won’t be fully finalized within the next 100 days. We’ll likely see both sides of Trump’s policy up and down at various points in the coming months and we’ll still be uncertain which side wins in early August when Trump passes the 200 day mark.