Last week 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 each major trading partner's trade surplus with the US from last year by its total commodity export, and then dividing the result by two.
The logic? Irrelevant.
They just need an excuse to start a fight.
Subsequently, global markets, including crypto assets, fell into chaos.
The current market uncertainty about Trump's tariff plan is whether these tariffs are a long-term national policy of the Trump team or a negotiation strategy to gain benefits from negotiation targets (trading partners, large enterprises).
If it's the former, it might indeed change the global trade landscape as many say, with the US moving towards isolationism, which would obviously be detrimental to the global economy in the long term.
But if it's the latter, perhaps the moment of announcing the "Reciprocal Tariffs" on April 2nd marks the peak of trade war fears, with subsequent developments still progressing through negotiations to gradually reach consensus between the US and bilateral/multilateral parties, 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 as a political promise to rust belt and lower-class voters, with an unusually firm attitude.
However, the author still tends to believe that tariffs are merely his negotiation chips, with his ultimate negotiation goal being to accumulate 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 containment of competitors: Forcing countries sitting on the fence to unite and further contain 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 disruptions have placed 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 demands 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 expanding power, and help the Republican Party gain an advantage in next year's midterm elections.
Is there a possibility that Trump truly considers tariffs a long-term national policy, believing tariffs can force manufacturing back and change the current hollowing out of US manufacturing, providing more employment positions?
But the problem is that current space and time do not allow this. With midterm elections for both houses next year, long-term high tariffs causing economic recession, stock market crash, and asset inflation would definitely cause the Republican Party to lose its currently slim advantage in the House of Representatives (and possibly 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 still quite small.
In fact, from the current perspective, within less than a week of introducing reciprocal tariffs, as contact with multiple countries occurs and actual negotiation benefits are confirmed, the Trump team has already begun softening its stance on tariffs.
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 tariffs and non-tariff barriers. This guy is a major supporter of tariff policies in Trump's 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, if negotiations with the most important top-tier trading players, especially the EU and China, do 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 "Reciprocal Tariffs" announcement: 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 "achievements" before next year's midterm elections, not to ruin the second half of his term with high inflation and a collapsing stock market.
Therefore, going "crazy" earlier and negotiating earlier is more advantageous for Trump.
As a creator of "uncertainty", Trump likewise does not want to face "uncertainty" before next year's midterm elections.
