Many experts are raising the pressing question of whether US President Donald Trump fully grasps the complexity of the tariff overhaul he has initiated. They want to know if the president understands how treacherous a path he has chosen by engaging in a global tariff war. According to analysts at Wolfe Research, Trump intends to test how far he can push his aggressive tariff agenda before triggering fresh market turmoil.

"With tariffs now being much better tolerated, we read Trump as preparing to once again test how far he can go," Wolfe Research noted.

Analysts believe that the White House is trying to identify "the highest tariff levels that markets and the economy can sustain," while remaining open to negotiations. Trump’s statements about his goals should be taken "at his word about his goals," even if his rhetoric eventually softens, they caution.

Recently, the US president escalated his trade campaign by sending formal letters to world leaders, warning of tariff hikes set to take effect on August 1, unless new agreements are reached with the White House.

The latest measures follow recent volatility in both equity and bond markets. A similar reaction occurred in early April, following the announcement of "Liberation Day." Trump later delayed the implementation of those tariffs by 90 days in an effort to secure a series of bilateral trade deals.

So far, only a few preliminary agreements have been struck, including ones with the United Kingdom, China, and Vietnam.

Markets are now responding with greater composure to Trump's tariff moves. Some investors even view the US president as being increasingly flexible in his approach.

However, currency strategists at Wolfe Research see these tariff delays as "tactical retreats" in the face of "intolerable consequences" rather than a shift in policy direction.

If the announced tariffs go into effect on August 1, the added levies could total $138 billion. The situation could deteriorate further if the White House hikes baseline tariff rates to 15%-20% for certain countries. Much will depend on the market reaction, according to analysts. "We don't think Trump is prepared to tolerate another crash like early April, but he could tolerate some market pullback from all-time highs," Wolfe Research concluded.