Trying to understand the policies of the current US administration can leave one falling into a trap. It runs the risk of attempting to apply logical and rational thinking where perhaps there is none. One such area where this may be the case is Trump’s approach to tariffs.

The US President has purportedly claimed on many occasions that tariff is “the most beautiful word in the dictionary”, which speaks to a very limited vocabulary, a very small dictionary, or both.

But setting aside the size of Trump’s vocab book, I am still perplexed by why he and his team think this policy works out well for the US.

So far there appear to be three reasons why tariffs are being imposed on countries and trading blocks.

The first is as a form of punishment. Trump wants to put nations that manufacture and supply fentanyl to the US on the economic naughty step. This is clearly the case for Canada, China and Mexico, who also happen to be the country’s three biggest trading partners.

The logic here would be that this will incentivise these nations to crack down on the fentanyl industry and thereby save the health, and indeed the lives, of American people.

The second is to bolster the US economy. In this case the argument would be that the administration is levelling the playing field between cheap imported goods and those manufactured domestically that currently cost more.

This in turn will make US goods more attractive, increasing demand and thereby driving economic growth as domestic industries expand.

The problem with all of the above is it probably won’t work… What Trump appears to be engaged in might be dubbed ‘Trexit’.

Tariffs run the risk of injecting costs into the US economy whilst reducing trade flows in a way that could have grave consequences that will hurt precisely the people Trump claims he is seeking to help. It’s Brexit on a global scale for a nation that isn’t already part of a closely integrated trading block.

I don’t propose to relitigate the pros and cons of Brexit here (and I know the UK may be “better off” negotiating its own trade deal with the US by being outside the EU), but there is near universal recognition that it was bad for the UK economy.

Tariffs seldom go unanswered by those that they are imposed upon and, for all the talk of deglobalisation, the world economy is still highly integrated, particularly when it comes to the trade in raw materials.

For all its size (“greatness”?), even the world’s largest economy cannot therefore stand alone. It is surprising in a way that it’s taken until now for the US stockmarket to reflect this.

Investors can only hope Trump is paying attention to the benchmark to which he has attached so much weight in the past.