President Donald Trump's policy pronouncements, including his recent protectionist trade measures and his latest assault on Amazon, are strictly tactical in nature, subject to his whims and moods, and are devoid of any overarching strategy.
This doesn't mean they are wholly erratic; it simply means that they are reactive to what's right in front of him—usually Fox News—and his topic of focus can shift quickly, sometimes even mid-tweet.
Though investors may despair that there is no clear method to his perceived madness, it is in fact possible to discern some patterns to his actions that provide a level of predictability.
Target selection: Trump's targets may seem random and disconnected, but they are not. He selects his target du jour based on who he feels most recently slighted him, whether that person is gold star father Khizr Khan or multibillionaire Washington Post owner Jeff Bezos.
The fact that Bezos is Amazon CEO is only incidental to the president's attacks, because Trump is not going after Amazon as part of a broader attack on big tech; he has not tweeted about Facebook's privacy scandals. He is simply trying to inflict pain on Bezos for the aggrievement he felt as a result of the Post's critical reporting. First Lady Melania Trump is fond of saying, "When my husband gets attacked, he will punch back ten times harder."
However, the president also has an attention span equivalent to the lifespan of a fruit fly, so he usually does not stay focused on the same target for very long. As a result, his bark is often much worse than his bite.
Companies temporarily in his cross-hairs largely have been able to escape any long-standing damage by offering token concessions, such as Boeing did with some tweaks made to the Air Force One contract, or by simply refusing to take the bait at all, as has been the case with Amazon and Bezos this week.
In the rare instance that Trump's target does choose to go toe-to-toe with him, the president has consistently shown that he will only escalate his rhetorical barrage as his base of political supporters have remained steadfastly loyal and dissent from congressional Republicans has been largely muted.
Control the news cycle: Trump also frequently engages a populist target that plays to his "America First" political base, for example attacking China or immigrants, in an effort to change the news cycle from a topic he does not want featured, such as the Mueller investigation.
Trump is not the only president to utilize such an approach. When Scott Brown won the Massachusetts senatorial special election in January 2010, it ended the Democrats' all-important 60-vote supermajority in the upper chamber as they sought to pass Obamacare. President Obama responded two days later by proposing that the Volcker Rule be included in the Dodd-Frank financial reform legislation.
This pushed Brown's electoral victory out of the headlines and sent bank stocks sharply lower, and in the process, fed red meat to Obama's disheartened progressive base. The major differences with the current president is the degree and frequency with which he employs this tactic.
Image is everything and everything is a negotiation: For Trump, appearance is reality. Thus for him, his tweets and one-off statements are one and the same with his policy actions. Similarly, he always wants to appear to have the upper hand in any negotiation. Thus, he tends to be a serial hostage taker, although he has not demonstrated an inclination for actually shooting a hostage as much as he wants others to think. Rather he seeks to use the hostage as a source of negotiating leverage.
This is why he announced an end date for DACA, to use it as a bargaining chip in border security and immigration negotiations with the Democrats, and has continued to declare victory even as DACA recipients continue to reapply for their visas under a court-ordered stay.
And this is why he could very well trigger the six-month notice of intent to withdraw under Article 2205 of NAFTA later this year. It does not necessarily mean that he will actually withdraw from NAFTA; he is simply looking to wield a stick against the Mexicans and Canadians. After all, as author of "Art of the Deal," Trump sees himself as a master negotiator and everything to him is negotiable.
This is not to downplay the sense of chaos that Trump has sown in Washington since his inauguration and in the equity markets more recently. Trump's pronouncements are often incongruent with one another and at times wholly divorced from reality. But Trump's lack of a strategic underpinning does not mean his unfiltered utterances and cacophony of tweets are without intended purpose.
Peter Navarro, Trump's nationalist director of trade and industrial policy, told CNBC on April 2nd in the context of defending the president's recent imposition of tariffs, "Everybody needs to relax and look at the chessboard here."
But to anticipate Trump's next move, you must understand that he isn't playing a complicated four-dimensional game of chess. It's more like a simple game of checkers against an opponent who won't stop heckling you.
So if investors tune out the noise, stop searching for each of Trump's policies to comport to an overarching strategy, and remember that most of his moves tend to be reactive, then they should be able to develop a better sense of what's coming next from this White House.
Commentary by Stephen A. Myrow, the managing partner of Beacon Policy Advisors LLC, an independent policy research firm based in Washington, DC. He previously served as a senior U.S. Treasury Department official from 2008 to 2009 under President George W. Bush. Follow him on Twitter @smyrow.
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