Author: Alex Xu, Mint Ventures
On April 2nd at 4 PM Eastern Time (after US stock market closing), Trump announced his "reciprocal tariff" plan.
He calculated the new "reciprocal" tariff rate by dividing last year's trade surplus of major trading partners by their total commodity exports, and then dividing by two.
The logic? Irrelevant.
They just need an excuse to start a conflict.
Subsequently, global markets, including crypto assets, fell into turmoil.
The current market uncertainty about Trump's tariff plan lies in whether the tariff increase is a long-term national policy of the Trump team or a negotiation strategy to gain benefits from negotiation partners (trading partners, large enterprises).
If it's the former, it might indeed change the global trade landscape, with the US moving towards isolationism, which would obviously be detrimental to the global economy in the long term.
However, if it's the latter, the moment of announcing the "reciprocal tariffs" on April 2nd might be the peak of trade war fears. The subsequent major development direction would still be gradually reaching consensus between the US and bilateral/multilateral parties through negotiations, with market panic gradually subsiding and asset prices returning to their appropriate levels.
Although Trump previously emphasized tariffs more as a "national policy" during his campaign and after taking office, using tariffs to force manufacturing back and making a political promise to the Rust Belt and lower-class voters, with an exceptionally resolute attitude.
However, the author still tends to believe that tariffs are just his negotiation chips, with the ultimate negotiation goal of gaining enough political achievements for himself, possibly including:
• More overseas orders: Other countries purchasing more US goods (food, energy, weapons, passenger aircraft)
• More domestic job opportunities: Large enterprises investing and building factories in the US (TSMC)
• Reasonable suppression of competitors: Forcing countries sitting on the fence to unite with him to further suppress China (Vietnam and South Korea have already announced high tariffs on Chinese steel exports today)
Additionally, the asset plunge and recession expectations caused by tariff disruption have put enormous pressure on Powell, whom Trump cannot command to lower interest rates. What about the economy and stock market on the brink of collapse?
Therefore, as long as he and his group can withstand the current massive pressure, and seemingly illogical tariff requirements gradually transform into achievements during negotiations, his reputation will gradually turn around.
These achievements will be converted into energy to further expand his political influence, become reasons for further expansion of power, and help the Republican Party gain an advantage in next year's midterm elections.
Is there a possibility that Trump truly considers tariffs as a long-term national policy, believing tariffs can force manufacturing back and transform the current hollowing out of US manufacturing, providing more employment opportunities?
But the problem is that current space and time do not allow it. With midterm elections for both houses next year, long-term high tariffs causing economic recession, stock market plunge, and asset inflation would definitely cause the Republican Party to lose its currently slim advantage in the House of Representatives (or even the Senate), making Trump a "lame duck president" in his remaining two years, making policy implementation even more difficult.
Currently, there is not enough time and space for him to pursue such a long-term national policy. By next year, if the stock market and tokens are not performing, he won't even be able to maintain short-term policies, let alone long-term ones.
So this possibility is relatively small.
In fact, from the current perspective, within a week of introducing reciprocal tariffs and through contact with multiple countries, the Trump team has already begun to soften its stance on tariffs after confirming actual negotiation benefits.
For instance, today the Director of the National Economic Council, Kevin Hassett, stated: "Over 50 countries have already contacted the White House to begin trade negotiations. President Trump is not trying to destroy the market by destroying the US market."
Immediately after, US Trade Advisor Navarro voiced that Trump seeks to reduce tariff and non-tariff barriers. This guy is a major supporter of tariff policies in the Trump camp and has recently been fiercely criticizing Musk's free trade stance.
So, might there be unexpected situations in this process?
It's possible.
For example, negotiations with the most important trading players, especially the EU and China, might not go smoothly. Currently, they have either already implemented countermeasures or threatened to do so if negotiations fail (April 13th), and Treasury Secretary Bezos warned on the day of announcing "reciprocal tariffs": Do not retaliate, otherwise the US will escalate.
This situation might lead to negotiation deadlock or even short-term conflict escalation (further mutual tariff increases), but considering most other countries will actively negotiate with the US, the overall situation is unlikely to be worse than now.
After all, Trump's core task is still to win more "political achievements" before next year's midterm elections, rather than letting high inflation and a collapsing stock market ruin his second half of the term.
Therefore, going "crazy" earlier and negotiating earlier is more beneficial to Trump.
As a creator of "uncertainty", Trump also doesn't want to face "uncertainty" before next year's midterm elections.
