The tariffs imposed by the Trump administration have taken center stage in global economic news, triggering volatility across the markets. Investors have endured a rollercoaster ride, as near-daily shifts in tariff policy have contributed to ongoing turbulence and uncertainty. At this point, the key question is: how will this ultimately play out? Let’s first look at the dramatic policy swings that occurred in just the past 72 hours. Markets initially rallied on reports that President Trump would not dismiss Federal Reserve Chair Jerome Powell and that tariffs might be scaled back. The administration suggested that tariffs on Chinese goods would be reduced to a range of 50% to 65%—still extraordinarily high and likely to deter most Chinese exports to the U.S. However, mixed signals soon followed. Treasury Secretary Scott Bessent denied reports that the White House was considering a unilateral tariff reduction. Meanwhile, Chinese officials stated that no active negotiations on tariffs were underway. President Trump, who had originally announced a 90-day pause on new tariff hikes, later revised his stance, suggesting the delay would last only a few more weeks. Trump approaches trade—and most negotiations—through a “win-lose” lens. Tariffs have become a cornerstone of his trade policy, and he needs to emerge from this standoff projecting a “win.” So, how is this likely to unfold? In my view, the Trump administration will eventually lower tariffs to a global average of around 5%. While this would still exceed the current general level of approximately 2.5%, it would allow Trump to claim a political victory. He could argue that he has doubled tariff rates while highlighting increased revenue collected from these measures. Moreover, he could retain leverage by threatening future tariff hikes against countries that maintain large trade deficits with the U.S. or that he believes are acting unfairly. This strategy would enable Trump to claim success while quietly backing away from a tariff policy that has proven economically disruptive and politically costly.