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Stabilizing Geopolitics and China-U.S. Trade Relations Drive Resurgence in Risk-On Narratives
Tariff Rationale Pivots from Protection to Revenue as Domestic Industry Narrative Fades
Perscient's semantic signature tracking justifications for tariffs on the basis of protecting domestic industry retreated notably this week, declining 0.91 to 2.23. The signature measuring language around tariffs as a means of reshoring manufacturing also fell 0.47 to 2.67, while narratives connecting tariffs to income tax replacement and revenue generation dropped 0.81 to 1.88. These declines mark a broad-based moderation in tariff-related discourse after an apparent warming in Sino-American trade relations, even as tariff revenue reached record levels of $195 billion in fiscal year 2025—more than 250% higher than the prior year.
The shift in narrative emphasis toward revenue comes despite average applied U.S. tariff rates rising from 2.5% to an estimated 27% between January and April 2025, before settling at 17.9% by September. Yet evidence continues to mount that tariffs often end up losing U.S. jobs on a net basis. More than half of manufacturing CFOs reported actively planning to diversify supply chains, with considerable shares seeking alternative foreign suppliers rather than domestic ones. This suggests firms are responding to tariffs through geographic diversification rather than the reshoring that protective tariff advocates had envisioned.
Meanwhile, the semantic signature tracking language around tariffs as a mechanism for getting other countries to pay their fair share rose 0.39 to 3.09, representing the strongest tariff-related narrative this week. This shift indicates a pivot in how tariffs are being discussed—less as tools of industrial policy and more as instruments of revenue generation and burden-sharing. The emphasis on revenue collection has even prompted speculation about potential rebate checks or refunds to Americans, though economists remain skeptical of such proposals.