Author: Alex Xu, Mint Ventures
Last week, at 4 PM Eastern Time on April 2 (after the US stock market closed), Trump announced his “reciprocal tariff” plan.
He divided the trade surplus of his main trading partner with the U.S. last year by its total goods exports, and then divided by two, to arrive at the new “equivalent” tariff rate.
Where is the logic? It doesn’t matter.
They just need an excuse to start a war.
Subsequently, the global market, including crypto assets, fell into a bloody storm.
The current market’s expectations regarding Trump’s tariff plan are chaotic in that: is the imposition of tariffs a long-term national policy of the Trump team, or is it a negotiation strategy used to gain advantages with negotiation counterparts (trade partners, large enterprises)?
If it is the former, it may be true, as many have said, it will change the global trade situation, and the United States is moving towards isolationism, which is obviously bad for the global economy in the long run.
But if it is the latter, then perhaps the moment when the so-called “reciprocal tariffs” were promulgated on April 2 is the peak of the fear of this round of trade war, and the subsequent development direction is still to gradually reach a consensus between the United States and bilateral and multilateral parties as multi-party negotiations advance, the panic in the market gradually subsides, and asset prices return to their proper level.
Despite Trump previously promoting tariffs as a “national policy” during his campaign and after taking office, using tariffs to force the return of manufacturing is also a political commitment to the Rust Belt and lower-income voters, and his stance is exceptionally firm.
However, the author still tends to believe that tariffs are only his bargaining chips, and the ultimate goal of his negotiations is to get enough political achievements for himself, which may include:
• More overseas orders: Other countries buy more U.S. goods (food, energy, weapons, airliners)
• More local job opportunities: Large companies investing and building factories in the U.S. (TSMC)
• Reasonable encirclement of competitors: Forcing countries that attempt to play both sides to join forces against China (Vietnam and South Korea have announced high tariffs on steel exports to China today).
In addition, the asset crash and recession expectations brought about by tariff disturbances have also put immense pressure on the indecisive Powell. Trump cannot use executive power to make the Federal Reserve lower interest rates, and what about the economy and stock market on the verge of collapse?
Therefore, as long as he and his clique can withstand the current intense pressure, his reputation will gradually be reversed when seemingly illogical tariff demands are gradually translated into results in negotiations.
These results will translate into the energy to further strengthen its political influence, justify further power expansion, and help the Republican Party gain an advantage in next year’s midterm elections.
So is there a possibility that Trump really regards tariffs as a long-term national policy, believing that tariffs can force the manufacturing industry to return, change the current hollowing out of the U.S. manufacturing industry, and provide more jobs?
But the problem is that space and time are not allowed at the moment. There will be midterm elections for both houses next year, and the economic recession, stock market crash, and asset inflation caused by long-term high tariffs will inevitably make the Republican Party lose the House of Representatives (or even the Senate), which currently has a weak advantage, and make Trump a “lame president” in the remaining two years of his term, making it more difficult to implement policies.
At present, there is not enough time and space for him to engage in such a long-term national policy. When the stock market doesn’t work next year, the token doesn’t work, he can’t talk about the long-term national policy, and he can’t hold it in the short term.
So the possibility is still relatively small.
In fact, from the current point of view, less than a week after the introduction of reciprocal tariffs, with contacts with many countries, after the actual negotiation benefits have been confirmed, the Trump team has begun to soften the tone of the tariffs.
For example, Kevin Hasset, director of the National Economic Council of the United States, said today: "More than 50 countries have already contacted the White House to begin trade negotiations. President Trump is not trying to destroy the U.S. market by destroying it. ”
Immediately afterward, U.S. trade advisor Navarro spoke up: Trump seeks to reduce tariffs and non-tariff barriers. This guy is a major supporter of tariff policy within Trump’s camp and has recently been fiercely criticizing Musk’s position on free trade.
So, will there be any unexpected situations during this process?
It is also possible.
For example, the United States has not been able to negotiate well with several of its most important trade players, especially the European Union and China. At present, the two companies have either implemented countermeasures or threatened to implement countermeasures if negotiations fail (April 13), and Treasury Secretary Bason warned on the day the “reciprocal tariffs” were announced: do not retaliate, otherwise the United States will increase the weight.
Such a scenario could lead to a stalemate in negotiations or even a short-term escalation of the conflict (further raising tariffs on each other), but considering that most of the other countries will actively negotiate with the United States, the overall situation is unlikely to be worse than it is now.
After all, Trump’s core task is still to gain more “achievements” before next year’s midterm elections, rather than letting high inflation and a crashing stock market ruin his second term.
Therefore, going “crazy” earlier and negotiating earlier is more beneficial for Trump.
As the creator of “uncertainty”, Trump also does not want to face “uncertainty” before next year’s midterm elections.
