When it comes to tariffs, hedge fund veteran Enrique Abeyta — and Paradigm’s ultimate market realist — offers a clear-eyed perspective on the White House’s broader economic strategy.

We sat down for a conversation over Zoom on Monday. In about 45 minutes, Enrique convincingly argued that Trump’s supposed “chaotic” trade policy is actually a calculated plan rooted in decades of business negotiations.

“He asks for the world,” Enrique explains, describing Trump’s approach to starting negotiations with extreme demands. “If he says ‘I want a 50% or 100% tariff,’ he knows it’s ridiculous.”

Yet, when the bargaining dust settles, this tactic creates the illusion of compromise while still achieving desirable outcomes. “This is frustrating to the market because they think Trump is changing his mind all the time.”

Paradigm’s macro expert Jim Rickards concurs: “Markets struggle with the uncertainty of President Trump’s tariff announcements… But I believe worry is a bit overblown.”

All to say: “There’s a plan,” Enrique reassures. Accordingly, tariffs are just the opening salvo in a broader strategy aimed at addressing dire imbalances in global trade.

And if tariffs are the opening act of Trump’s economic strategy, Enrique asserts, “China is undoubtedly the main event.”

Your Rundown for Friday, April 4, 2025...

Reshaping Global Trade to Neuter An "Aggressor"

According to Enrique, nearly every move in Trump’s playbook — from reshoring manufacturing to tackling the fentanyl crisis — ultimately points back to one central aim…

Countering China.

1. Combatting Economic Aggression

For Enrique, China has risen to global prominence through economic policies that have left the U.S. vulnerable in critical industries. “China is an aggressor,” he says bluntly.

One glaring example is rare earth minerals — essential for modern technology and warfare — where China dominates global refining.

“America's got tons of rare earths,” Enrique explains. “The problem is the Chinese were playing chess… I don’t even know that we were on the checkerboard.”

By flooding the market decades ago, China drove U.S. companies out of business and established dominance in this critical sector.

As a result, America now faces significant reliance on China for rare earths — reliance that Enrique believes didn’t have to happen.

“Twenty-five years ago, we made a third of the rare earths,” he says. “Thirty years ago, we probably produced the majority of them.”

But by failing to respond to China’s aggressive actions, the U.S. allowed itself to become dependent — a vulnerability Trump aims to address.

2. Reshoring for National Security

Another pillar of Trump’s strategy, according to Enrique, is reshoring — bringing manufacturing back to the U.S. — which is essential for long-term economic stability and national security.

“We’ve created industrial vulnerabilities,” he warns, pointing out how dependence on Chinese supply chains could be catastrophic in a conflict scenario.

Thus, reshoring isn’t just about economics; it’s about reducing America’s exposure to geopolitical risks.

“If China decided to get aggressive — let’s say with Taiwan or even the Philippines — we’d be dangerously reliant on them for critical goods,” he says.

And whether or not it’s an immediate economic win, Enrique believes reshoring strengthens America’s position against its most formidable competitor.

3. Stemming Fentanyl at Its Source

The third front in Trump’s strategy against China is less about trade and more about public health: stemming the flow of fentanyl into the U.S.

While Mexican cartels traffic fentanyl across the border, Enrique emphasizes its origins: “The fentanyl problem is China, China, China.”

He argues that addressing this crisis isn’t just about saving lives; it’s also about counteracting China’s broader (and nefarious) strategy to undermine America.

“Fentanyl is one way they’re poisoning our country,” he says. While domestic enforcement plays a role, Enrique believes cutting off Chinese supply lines would make a significant impact.

“Trust me,” he adds. “You stop those imports of fentanyl coming in — it’s going to help a lot.”

A Bipolar World

Enrique concludes that Trump views global power dynamics through a bipolar lens: the U.S. versus China.

Unlike past rivalries with nations like Russia, China represents a unique challenge due to its rapid growth and ability to scale production. “China got to this point in 30 years,” he explains. “Russia never really matched us in resources or economic power.”

Despite these challenges, Enrique remains optimistic about America’s ability to counter China under Trump’s leadership.

He points to Trump’s track record as evidence of his ability to navigate complex negotiations and achieve results. “We have four to five decades of successful business actions,” Enrique notes.

Ultimately, he believes tariffs are just one piece of a larger puzzle aimed at making America anti-fragile.

As Enrique sees it, when it comes to tariffs, Trump is ultra-focused: “There’s one thing Trump cares about on this planet — neutralizing China.”

North America’s “Unified Common Market”

“So let's bring this all together,” Enrique says. “I believe the goal of tariffs, especially for Canada and Mexico, is to create what I would call a unified common market of North America.

“One that imposes significant barriers on China…

“I think when all is said and done,” says Enrique, “they’ll redo the former NAFTA. And we get a bunch of good stuff, and it'll be fair.

“I think they put a 20, 30 or even a 50% tariff on all goods coming from China into North America. And that may extend throughout Asia, including Vietnam.

“But Trump’s goal is to neuter China — to stop exporting our wealth and our consumption that subsidizes them to be a global aggressor.

“If we don't,” Enrique concludes, “there’ll be an inescapable backlash in the next 20–30 years.”

Market Rundown for Friday, April 4, 2025

S&P 500 futures are down 2.75% to 5,280.

Oil is down 7% to $62.20 for a barrel of West Texas crude.

Gold’s steady at $3,120.10 per ounce.

And Bitcoin’s a spot of green: up 0.50% to $82,940.