Protectionism

Chucky Schumer says that he has the votes to push protectionist tariffs over a veto. Protectionism will be a huge mistake. First of all, any meaningful tariffs will raise prices significantly. This will contribute to inflation. Tariffs will also weaken the dollar, also contributing to inflation. Higher inflation, then, will be the first effect. The second effect will be a lower demand for Treasuries. China, with 40% of their economy based on exports, will be hit hard. Any unexpected shocks to the global economy will raise risk premiums across the board. Combine decreased demand for Treasuries, inflation, and financial shocks, and you have a recipe for massively higher interest rates.

I think this scenario could play out over the next couple of years. It bears watching, because it is the kind of thing that will be completely overlooked by the mainstream. The first idea that comes to mind is buy gold.