In the short term, Trump will not achieve MAGA, and diversification might be a costly path.
In our analysis, we understand that in the short term, Trump will not achieve MAGA (Make America Great Again); he will need an entire generation (20 to 25 years) to reach this goal. From Brazil, we see that Trump wants to negotiate with those who yield to his global pressures. He is a voracious player who takes extremely high-risk bets.
Everything is interconnected: models, goals, premises, and dreams. To begin with, investing in Elon Musk's dreams, Trump will need to direct the American economy inward and retain dollars in the USA. But why Elon Musk? Because Musk is one of the idealists of this new model and an avid supporter of Trump's model. So, as good mathematicians, Trump and his team, with Musk, realized that the trade deficit exceeds a trillion dollars, meaning more dollars leave the USA than enter.
Premises:
Containing the outflow of dollars is crucial to balancing international trade.
Streamlining American spending is essential; with the savings, he can spend on internal projects, seeking to maintain his legacy.
Going to Mars will demand many billions or trillions of dollars. Where would they get all that money?
Leaving environmental agreements and the WHO will give them the margin to promote industrialization without asking permission from other countries.
Feeding Americans: the food produced should be destined for internal demand and then the surplus will be negotiated with those who yield to their pressures.
Agricultural diversification: it will take years to achieve consistent productivity, requiring substantial investments from the private sector, producers, and the government. Trump hasn't even mentioned massive investments for producers; we believe he hasn't even cited agriculture as a source of sustainable development.
Soy, corn, and cotton are essential today; they feed us and the animals that feed us. If Brazil and the USA stop producing, what would happen to the rest of the world?
Accumulating stocks is not good for the stock market; if China starts importing more from the USA, Trump might change his stance.
Pay attention to Trump's statements:
He will continue to strengthen the internal industry, generating less need to import and more local jobs.
The high trade deficit causes constant economic imbalance.
Trump is determined to reduce USA spending.
As a good businessman, he will be supported by financially powerful people. This can be a double-edged sword.
Traits of Trump mixed with Musk's ideals can create an economic collapse due to heavy investments in technology and the race to Mars.
Reducing taxes can be efficient for doubling the economy in a short time, and self-sufficiency can allow the exclusion of tariffs again.
The question: how long? Trump might not live to see his dream come true, as it may take more than 20 years. We hope that legacy and negotiation power prevail over greed, and soon, everything will return to normal.
Concerns of American Producers:
The concerns of American producers regarding Trump's tariff policies are legitimate, as agricultural products produced in the United States will become more expensive, especially since they require a large part of the fertilizers from outside the country, in addition to potential retaliations from countries affected by the tariffs. There will be risks of a general increase in food prices for all products produced outside and within the USA, which in the first few months could generate significant economic instability and inflation will arrive at bullet train speed rather than on horseback, as we say here in Brazil.
With all these uncertainties, diversification might be a viable strategy, but it's important to remember that the transition will take time and require substantial investments from all links in the production chain. To ensure this is the best option, we must first consider the following points:
Cost Analysis: Evaluate the costs associated with diversification and whether there are incentives or subsidies available to support this transition. If not, it would be good to think carefully before taking any initiative.
Technology and Innovation: Investing in agricultural technology can increase efficiency and productivity, helping to mitigate the impacts of tariffs.
Partnerships and Cooperation: Explore partnerships with other farms, cooperatives, and companies to share resources and knowledge, creating a support network without waiting for government initiatives, which at this point, may be delayed.
Alternative Markets: Identify alternative markets for your products that may be less affected by tariffs.
Added Value: If the solution is to diversify, bet on high-value-added products where tariffs do not impede consumption in a short period.
Sustainability: Adopt sustainable agricultural practices that can attract investments and markets concerned with sustainability.
Reflections:
Should American producers be patient and wait to see how far Trump will go with his strategy of imposing tariffs on imported products to gain better participation in international trade and then gradually lower the tariffs?
How long will it take for the USA to achieve self-sufficiency in food and industrial products, without depending on countries like Mexico, Canada, and China?
What would you do if you were an American producer? Comment and share!
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