The Fourth Turning, Trump’s Tariffs, and the Economic Reset

History moves in cycles, and as The Fourth Turning suggests, we are now in a period of crisis—where old systems are breaking down, and a new world order is emerging. The global economy, once defined by free trade and globalization, is now facing a hard reset. Tariffs, policy uncertainty, and economic turbulence are not just accidental consequences—they may be intentional strategies to reshape the system.

Are We Witnessing a "Kitchen Sink" Economic Reset?

Darius Dale, CEO of 42 Macro, compares Trump’s economic strategy to Reagan’s 1980s approach—inflicting short-term pain for long-term gain. With increased tariffs on China, restrictions on immigration, and overall policy uncertainty, the administration seems to be forcing a reset toward a supply-side economy.

• The U.S. has sharply increased tariffs on Chinese goods, echoing past protectionist strategies.

• China and the EU are responding with retaliatory measures, further fragmenting global trade.

• Businesses and consumers are holding back on investment and spending due to uncertainty.

This upheaval aligns with Fourth Turning dynamics—where institutions and economies experience extreme stress before transformation. While the ultimate goal may be economic expansion, the immediate impact is market turmoil and slowed growth.

Policy Uncertainty and the Freeze on Confidence

In a period of crisis, uncertainty becomes a powerful force. Consumers, despite rising disposable income, are saving instead of spending. Businesses, fearing unclear policies, are pulling back on investment—leading to a contraction in real business investment. This hesitation is already dragging down growth, and if uncertainty lingers, it could tip the U.S. into a deeper slowdown than expected.

The Fourth Turning teaches us that institutional confidence is shaken during these periods. Without clarity on fiscal policy—especially regarding tax cuts and deregulation—markets may continue to struggle, adding fuel to the broader societal and economic reset.

Will the Fed Be Forced to Change Course?

In past Fourth Turnings, financial systems have undergone dramatic shifts. The Federal Reserve now faces a dilemma:

• If inflation remains above 2.7-3.3%, the Fed must choose between tightening (risking a recession) or revising its inflation target higher.

• A shift in the Fed’s stance on inflation could be one of the biggest market catalysts of the year, influencing liquidity and risk appetite.

If the Fed follows historical patterns, it may eventually cave and provide liquidity—but likely reactively rather than proactively, risking further economic instability before stability returns.

What Comes Next?

The patterns of history suggest that we are not in a temporary economic downturn, but in a fundamental shift. The reconfiguration of global trade, the rise of protectionism, and economic uncertainty are all signs of a system in flux. The Fourth Turning reminds us that these moments of upheaval are necessary for transformation.

The question is: Who will adapt and emerge stronger in the next era?