Written by: Luke, Mars Finance
In early April 2025, Trump triggered a global economic storm with a 10% comprehensive tariff policy. From the failure of gold as a safe haven to the evaporation of $5.4 trillion in US stock market value, followed by protest waves and urgent business negotiations, this crisis is like a high-risk game testing investors' judgment. This article will analyze the logic behind the chaos from four perspectives: financial chain reactions, Trump's "economic revolution", social and business pushback, and historical lessons and investment prospects.
I. Financial Chain Reactions Under Tariff Impact: Why Did Gold Fail to Defend?
With Trump's tariffs landing, global stocks evaporated $6.6 trillion, with US stocks losing $5.4 trillion in two days, and 400,000 accounts significantly shrinking. Surprisingly, gold, a safe-haven asset, was not spared, dropping 1.9% on April 5th. What was the reason?
The answer lies in the chain effect of leveraged trading. Futures market high-leverage amplified US stock declines, triggering "margin calls" for investors who sold gold and other highly liquid assets to cover margins. Gold ETF holdings dropped 2.3% that day, confirming this pressure. This short-term sell-off is driven by trading sentiment, not macro trends. Once the market stabilizes, funds may flow back to gold, but currently, the safe-haven logic has been overturned by liquidity needs.
Meanwhile, WTI crude oil dropped below $60/barrel, weakening inflation expectations. With significant weight in US CPI, oil's price decline offset tariff-induced price pressures, pushing Fed rate cut expectations to 5 times. Balancing inflation and recession, the Fed leans towards stable growth. This suggests that short-term safe-haven assets may be under pressure, but rate cut expectations might benefit bonds and growth stocks.
II. Trump's "Economic Revolution" and Wall Street's Shock: Hoover's Lesson
Trump's attitude towards the crisis was clear. On April 5th, he claimed on the Truth platform: "This is an economic revolution, and we will definitely win." He implied the stock market crash was intentional, aimed at reshaping trade patterns. However, this gamble caught Wall Street off guard.
Treasury Secretary Bessent, once seen as a financial bridge, faced rumors of potential resignation on April 6th due to "absurd tariff calculations". MSNBC revealed that he merely analyzed scenarios in White House meetings, with decisions led by Peter Navarro, Howard Lutnick, and Jamieson Greer. Wall Street found no help, with JPMorgan predicting US GDP growth would drop to -0.3%, triggering recession alarms.
Hoover's historical precedent provides a mirror. In 1929, Hoover pushed the Smoot-Hawley Tariff Act, raising tariffs to 59% despite corporate opposition, triggering a global trade war that exacerbated the Great Depression. Trump's all-in approach is similar, but his team exchanged a 20% US stock decline for a dollar drop to 101 points, 5 rate cut expectations, and avoided substantial recession (April 5th employment data remained robust). This aligns with his weak dollar and low-interest-rate goals, but supply chain disruptions and stock price crashes have left businesses suffering. Investors must be wary: short-term policy dividends might mask long-term risks.
III. Social Pushback and Correction Pressure: Market Signals Emerge
Market volatility quickly ignited social anger. On April 6th, the "Let Go!" movement swept over 1,000 cities globally, protesting tariffs, federal layoffs, and Musk's Doge department. At Washington's National Square, slogans like "Penguins Against Tariffs" and "Make My 401k Great Again" directly pointed to the policy's impact on the middle class. Tesla became a target due to Musk's alliance with Trump, with showrooms in the US and Europe frequently attacked, and boycott sentiment rising.
The business world chose more direct action. On April 5th, tech journalist Kara Swisher revealed that a group of tech and finance leaders visited Mar-a-Lago to "discuss common sense" with Trump. These individuals, who had donated millions for his election, now face trillions in losses and view Musk as a potential pressure point. Meanwhile, Bessent's resignation rumors and proposals like Senator Chuck Grassley's tariff power bill show internal and external pressures forcing Trump's team to face correction choices. Texas Senator Ted Cruz warned: "Comprehensive tariffs will destroy jobs and devastate the economy." The confidence of policy implementers is facing severe real-world challenges.
IV. Learning from History and Investment Choices: Avoid or Buy the Dips?
Is this storm a technical adjustment or a prelude to substantial recession? The answer depends on policy space and correction ability. The Fed still has about 400 basis points of rate cut room (assuming current rate of 4.8%), with 100 basis points saved in interest far exceeding Musk's Doge department's fiscal tightening. If economic data doesn't comprehensively deteriorate, asset crashes might offer buy the dips opportunities. However, research funding cuts (like NIH) and global retaliatory tariffs might weaken US long-term competitiveness, with Hoover-era trade war consequences as a warning.
The political dimension is equally crucial. The 2026 midterm elections are Trump's concern; if congressional majorities shift, his policies will struggle. This might explain his urgency to create "achievements" in the short term. Currently, the Trump team's correction speed—like Mar-a-Lago meeting results—will be the next phase's indicator. If they can balance short-term volatility with long-term goals, this "economic revolution" might have a turning point; if they repeat Hoover's mistakes, consequences are unpredictable. Investors might consider these strategies:
Short-term: Focus on bonds and defensive stocks under rate cut expectations, avoid high-leverage assets.
Medium-term: If policy correction succeeds, undervalued US stocks and gold might rebound.
Long-term: Beware of trade war escalation, diversify investments to emerging markets to hedge risks.
Conclusion
Trump uses tariffs as a chess piece, attempting to reshape the economic landscape, but exposes the strategy's fragility amid market volatility and social backlash. His team demonstrates market manipulation ability, but Hoover's lesson reminds us that stubborn self-confidence might come at a high cost. Your next investment step depends on balancing short-term chaos and long-term trends. Understand the game to find opportunities in crisis.
