The shoe has finally dropped. US President Trump signed two executive orders on so-called reciprocal tariffs at the White House last night, announcing that the United States will establish a 10% minimum benchmark tariff on its trading partners and impose higher tariffs on certain trading partners.
Trump displayed a large sign with the words Reciprocal Tariffs on it, which showed which trading partners the US planned to tax and how much they would tax. The UK 10%, Brazil 10%, Australia 10%, the Philippines and Israel 17%, the EU 20%, Japan 24%, South Korea 25%, India 26%, South Africa 30%, Switzerland 31%, Indonesia 32%, Sri Lanka 44%, Vietnam 46%, Cambodia 49%...
A senior White House official said the base tariff rate (10%) will take effect at dawn on April 5, and the reciprocal tariff will take effect at dawn on April 9.
U.S. Treasury Secretary Benson said in a post, I advise all countries not to take retaliatory actions. We can see if there will be a different tariff floor (from the announced figures). Trumps mentality may be to let things stabilize temporarily. I am not involved in the negotiations, and we will see if there are any negotiations before April 9 (the date when the reciprocal tariffs take effect).
First up and then down, the cryptocurrency and stock markets were attacked indiscriminately
A few hours before Trump announced the tariff policy, the U.S. stock market fluctuated violently. Nasdaq futures fell 2.4%, and SP 500 futures fell 1.6%. Reuters said this means that investors expect the stock market to fall sharply after opening on the 3rd. After the tariff policy was implemented, the U.S. dollar index DXY resumed its decline, falling below the low point when Trump announced the comprehensive tariffs, and the latest report was 103.24. When the reciprocal tariffs were announced, it reached a high of more than 104.
In the crypto market, when Trump announced at the beginning of the early morning meeting that the tariff base would be 10%, Bitcoin once surged to $88,000, setting a new high since March 25, up more than 5%; but then announced that additional tariffs would be imposed on about 60 countries with the largest trade imbalances with the United States, Bitcoin gave up most of its gains and fell below $82,500. Judging from Bitcoins current performance, it can be said that it has no safe-haven properties. At the same time, spot gold briefly broke through $3,160/ounce, setting a new record high.
The altcoin market has experienced a terrible rise and then fall. According to Coinglass data, in the past 4 hours, the entire network has liquidated $293 million, of which long orders have liquidated $187 million and short orders have liquidated $106 million.
Ridiculous tariff calculation method
Trump claimed that the new tariff measures are aimed at promoting American manufacturing, making America rich again, jobs and factories will come back, and even announced that April 2, when reciprocal tariffs are imposed, will be Americas Liberation Day. But at the same time, the tariffs imposed in Southeast Asia are at the forefront, with Vietnam adding 46%, Thailand adding 36%, and Cambodia adding 49%, which has dealt a heavy blow to the real economy.
According to crypto KOL Fiona, after Trump was elected, many entrepreneurs believed that the US would impose the most severe tariffs on China, so many went to Southeast Asia, especially Thailand and Vietnam, to buy land and build factories. Since this group is not small, the price of local industrial land also soared in a short period of time. Just like the rush to buy houses, the rush to buy and the series of costs of local recruitment laws and registrations cost a lot of money.
For example, Nike employs more than 450,000 people in 130 factories in Vietnam. Its stock price has fallen by more than 6%, and the impact of tariffs will also affect Nikes brand revitalization plan. Nikes production capacity in Vietnam accounts for more than 50% of its global total production. This potential tariff policy is expected to increase Nikes additional costs by more than $400 million per year.
For the United States, the implementation of absolute reciprocal tariffs will not bring benefits to American companies and people. For example, although it can increase the U.S. federal fiscal revenue in the short term, in the long run it will cause U.S. commodity prices to soar, thereby pushing up the inflation rate.
Economists are concerned that Trumps tariff policy will inevitably push up U.S. inflation and damage consumer confidence. The Yale Budget Labs forecast shows that after the implementation of reciprocal tariffs, if other countries do not take retaliatory measures, U.S. personal consumption expenditure prices will rise by 1.7% in the short term, and the real GDP growth rate will drop by 0.6 percentage points in 2025; if other countries take retaliatory measures, the increase in U.S. personal consumption expenditure prices will expand to 2.1%, and the real GDP growth rate will drop by 1 percentage point.
What is even more ironic is that the so-called tariff rate data released by the Trump administration is itself an absurd calculation result. He claimed that some countries imposed tariffs of up to 30%, 40%, or even more than 50% on American products, but the fact is that these figures are not derived from real tariffs or non-tariff barriers, but from a pseudo-scientific formula of dividing the trade deficit by the other partys total exports.
For example, the United States has a trade deficit of $17.9 billion with Indonesia, while Indonesias exports to the United States are $28 billion. 179 divided by 280 is 64%, and Trump claimed that this is the tariff rate imposed by Indonesia on the United States. The European Union, Israel, South Korea and other countries have also been created with false tariff rates of dozens of percentage points in a similar way, and they even ignore the existing trade agreement with South Korea.
This complete misunderstanding of comparative advantage and the structure of international trade has reduced the so-called reciprocal tariffs to a political slogan and a tool for attracting attention in practice. It is particularly ironic that while Trump accuses other countries of unfair high taxes, he himself imposes taxes in an extreme way, thereby accidentally hurting American companies, brands and middle-class consumers who have already moved abroad.
Moreover, high tariffs have not really driven the return of manufacturing. From Trumps first term to Bidens succession, the US government has continued to promote the return of industries, but in the past eight years, the return effect has been limited. On the contrary, due to repeated trade policies and increased cost uncertainty, overseas capital has become more cautious about investing in the United States.
It can be said that this behavior of faking tariff rates by using trade deficits not only reflects a disregard for the basic principles of international economics, but also exposes the shortsightedness and internal friction of the entire policy design. Trumps tariff policy is not so much about making America great again as it is about playing a miscalculated game, pushing reality into an inflation and investment winter, which ultimately hurts others and does not benefit himself.
Buy the dip or go short, how will the crypto market perform in the future?
Last night’s tariff results were the worst version of what the market had previously speculated, and global financial markets were all hit to varying degrees.
Chris Burniske, former head of crypto at Ark Invest and current partner at Placeholder VC, wrote that he originally expected today (April 2) to be a positive turning point and believed that the market was too defensive, but the reality is not the case. He said that he still hopes that tariff negotiations can start quickly. I will not take radical actions. If the market remains in this range, I will choose to continue holding; if there is a gap down due to todays trend, I will pay attention to some targets and choose to increase my position when the opportunity arises.
BitMEX co-founder Arthur Hayes said, The market doesnt seem to like Liberation Day very much. If Bitcoin can stay above $76,500 between now and US Tax Day (April 15), then we are out of danger.
