The cat, the rhino and why Trump's make-believe tariffs will still move markets

If US President Donald Trump announces a tariff on Truth Social, but never actually imposes it, did it exist? If news that tariffs are coming prompts companies to "front-run" the levies, do they even need to happen? If tariffs are imposed, importers pay them, and yet, there's no seeming effect on prices, need we worry about them?

- John Authers

"The boy who cried tariffs continues to warble his perplexing ballad of random numbers from the White House," complained Ms Danni Hewson of London investment house AJ Bell this week.

"Investors are listening, and nodding to acknowledge the latest verse, but largely getting on with business as usual. Most are probably waiting for the wolf to actually show up before properly evaluating the danger," she said.

There are issues over second-guessing the mercurial Mr Trump. He is unpredictable by design. But beyond that lies deeper issues of metaphysics. Apparently abstruse philosophical debates over reality and existence have long shaped our understanding of markets and the economy. Mr Trump's behaviour puts some famous thought experiments into new focus.

SCHRODINGER'S CAT AND WITTGENSTEIN'S RHINOCEROS Quantum physicist Erwin Schrodinger pondered evolving theories about reality with a thought experiment about a cat. It is in a box with a vial of radioactive poison. There is a 50 per cent chance that it will break, killing the cat. Until we open the box, as far as we are concerned, it is both alive and dead. Opening the box will change that status, but doesn't change the cat.

This is relevant to trade policy. Fund manager Bob Elliott, of the Unlimited Group, referred this week to Schrodinger's Tariffs. Until they take effect, and we see their effect, they're not real - ignoring might make them go away. Or alternatively, they simultaneously exist and don't exist.

Philosopher Ludwig Wittgenstein went further; when his professor Bertrand Russell tried to get him to accept that there was no rhinoceros in the room, he refused - even after Russell checked under the table.