Economist Says Trump’s Plan Is To Prolong Reduced Tariffs

Torsten Sløk, chief economist at Apollo Global Management, laid out a potential scenario in which President Donald Trump’s tariffs are extended just long enough to reduce economic uncertainty while also delivering a significant boost to federal revenue.

Businesses and consumers remain uncertain about the next steps regarding President Trump’s trade policy.

This comes as the 90-day pause on Trump’s “reciprocal tariffs” nears its end, Jason Ma reported for Fortune.

Businesses and consumers remain uncertain about the next steps regarding President Trump’s trade policy. However, Sløk suggests there may be a way to retain tariffs while framing it as a win for both the U.S. and its trade partners.

In a note titled “Has Trump Outsmarted Everyone on Tariffs?” Sløk proposed a scenario where tariffs are kept well below Trump’s most aggressive levels to avoid economic damage while still providing clarity to global markets.

“An extension would immediately reduce uncertainty, giving a boost to business planning, employment, and financial markets,” he wrote.

“This would seem like a victory for the world and yet would produce $400 billion of annual revenue for U.S. taxpayers. Trade partners will be happy with only 10% tariffs, and U.S. tax revenue will go up. Maybe the administration has outsmarted all of us.”

He speculated that the administration’s strategy might be to maintain 30% tariffs on China and 10% on all other countries, while giving trade partners 12 months to reduce non-tariff barriers and open up their markets.

The 90-day pause on Trump’s reciprocal tariffs—imposed earlier this year and blamed for a sharp global market selloff in April—is set to expire next month.

The temporary reprieve was designed to give the U.S. and its partners time to negotiate new deals. So far, only two agreements have emerged: one with the UK and a short-term deal with China.