In an interview to CNBC-TV18, Gave suggested that Trump is using tariffs to pressure America’s trade partners into economic concessions. The administration’s approach appears to be leveraging trade restrictions to push foreign governments into purchasing US Treasuries and strengthening their currencies.
According to Gave, much of the tariff-driven strategy will hinge on the anticipated meeting between Trump and China’s President Xi Jinping in May. The outcome of this discussion will likely determine whether tariffs remain a long-term fixture or if a new trade agreement—potentially a “Mar-a-Lago Accord”—emerges.
Unlike his first term, where Trump frequently celebrated stock market highs, Gave noted that the administration’s current focus is on three primary economic goals: lower bond yields, a weaker US dollar, and lower oil prices.
According to Gave, the administration’s push for lower interest rates and a weaker dollar is driven by political timing. By taking economic pain upfront, they aim for a 2026 recovery—just in time for the midterm elections.
“The setup today in the US is completely different. In the second half of this year, you have a massive amount of debt to roll over,” Gave noted, explaining that companies that borrowed at ultra-low interest rates in 2020 will face much higher refinancing costs unless rates come down. This financial squeeze could impact corporate spending and employment, making it a priority to lower borrowing costs before the 2026 midterm elections.
Gave also argued that the US dollar is currently overvalued, making American goods and travel costly relative to other nations. A weaker dollar would improve trade competitiveness and balance economic conditions worldwide.
Below are the excerpts of the discussion.
Q: How real are these tariffs in terms of their durability? The Canada, Mexico tariffs and the 10% extra tariffs on China, they seem to be motivated by stopping the flow of illegal drugs into the US. It is not to raise revenues, at least that is not the stated objective. So, is this going to off-ramp at some point or do you think this is here to stay?
Gave: The big question is, are the tariffs a tool towards achieving something or is it the end goal? I think so far there are still a lot of signs that Trump is looking at tariffs like a tool to achieve something else.
Fundamentally, what does Trump really want to achieve? I think the first goal right now, what seems pretty obvious at least to me is that contrary to Trump 1.0 who kept tweeting about stock market making new highs etc, what they are worried most about is three things- one, they want to get the bond yield down, they want to get the US dollar down and they want to get the oil price down. And pretty much everyone of these policies that they have implemented, it is really driven by these three goals.
It is very hard to predict what Trump is going to do next, but for me the tariffs remains a tool. It is a tool that you are going to use to beat up America’s trade partners, whether Japan, Korea or China and to say, I am going to tariff you unless you go out and buy US treasuries and unless you raise the value of your currency.
I think in the next few months we will get a lot of this until Xi Jinping and Trump meet in May. And then we will have a better outlook on whether tariffs are here to stay or whether some kind of Mar-a-Lago accord gets achieved.
Q: Are the three things you mentioned consistent with a higher stock market?
Gave: I don’t think it’s as much of a priority.
Q: That is an interesting and important point, because the general assumption is that he’s very focused on the Dow being at a new high. It’s like a point of pride. But you’re saying the target this time is not higher stock markets, it’s low cost of borrowing?
Gave: I think so. You’ll notice this time, he hasn’t tweeted once on the level of the stock market. You’ve had tweets from Elon Musk, you’ve had talks from JD Vance, from Scott Bessent, from Trump himself, on the 10 year yield. And I think the reason for that is actually the setup today in the US is completely different. The big problem is, in the second half of this year, you have a massive amount of debt to roll over. Because remember, in the second half of 2020 interest rates were at record lows. Every single US corporate went out and issued debt when interest rates were below 2% you’re a CFO of a company, it’d be criminal not to issue debt. They all did it. And most of corporate debt in the US is five years. So now these guys all have to roll over the debt in the second half of 2025 and if they roll over at much higher rates, that means that capex is going to get cut, that means that employment is going to get cut to pay for the debt. So, they have to get the cost of debt down, without that you are facing a really bad 2026 and guess what happens in 2026 mid-term elections? So, take the pain up front, get the lower interest rates so that the economy can be rebounding by 2026 on the back of lower energy and lower interest rate costs.
Q: I think average tariffs into the US are 2.5-3%. By the end of the year, where do you see those?
Gave: That’s a really tough question, because I think a lot is going to depend on those negotiations with China.
Q: But are they going to be higher?
Gave: I think they’re going to be higher, because part of Trump’s view of the world is foreigners should pay more. Now I’m not quite sure how he came to that conclusion, but essentially one of his hardcore beliefs, is foreigners have been taking advantage of the United States, and they need to pay more. And a lot of these policies, like the golden visa thing, where foreigners are going to pay $5 million to move here, even though you already have an EB5 visa that costs $800,000 and only 2,000 people take a year. Somehow millions are going to take the $5 million option. There is this perception of foreigners have to pay. So yes, there will be higher tariffs. The big question is, will it be marginally higher as you said 2.5% or will it be 10-12%? If you’ve got a 10% across the board, that’s not going to throw the global or the US economy off the rails. If you move to 25-30% then all of a sudden that’s much more problematic for global growth.
Q: You’re saying Trump wants the dollar lower. So far, it seems to be working. Yields, are down about 50-60 basis points on the 10-year over the last one, one and a half months, dollar is lower as well. What’s your sense?
Gave: When you look at Treasury Secretary Scott Besant, his very first thing when he got into his new office was to pick up the phone to call his Japanese counterpart and essentially tell him, the Yen is too low. Which it is. The Yen is ridiculously low.
If you have spent any time in Japan, it used to be that if you went out for dinner in Japan, you’d have to check your bank balance to make sure you could afford dinner. And now you go there and things are really, really cheap. So, bottom line is, the US does want a revaluation of Japan, does want a revaluation of renminbi. That’s going to be obviously on the table with the discussion with Xi Jinping in May. I think there’s a good chance that, that gets achieved, because all these currencies are today massively, massively undervalued. And the US dollar is very expensive. You go travel in the US today, for most of my life, travelling to the US was a decent value experience. Today, it’s completely out of whack relative to everywhere else in the world. So, yes, the US dollar has to come down. It’s too high.
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