The global market has experienced a 'Trump storm':
U.S. stocks plummeted, with the S&P 500 falling over 5% in two days, and tech stocks on the Nasdaq bleeding heavily;
Bitcoin plummeted, with a 24-hour drop of over 15%, and leveraged long positions were wiped out;
Gold and oil both fell, while the fear index VIX soared, reaching the highest level since the pandemic began in 2020.
Mainstream opinion targets Trump's 'crazy tariff policy', believing it to be 'self-defeating' and potentially leading to a global recession. But is the issue really that simple?
My core viewpoint:
Trump's tariff policy is by no means a 'spur-of-the-moment' decision, but a proactive response to the deep-seated contradictions of the dollar system.
The short-term goal is to create market panic, paving the way for the Federal Reserve to cut interest rates and dilute debt; the long-term goal is to reconstruct the global trade order and save American manufacturing.
However, this strategy carries high risks and may accelerate the collapse of dollar credit, even provoking a backlash from the wave of 'de-dollarization.'
II. Deep logic: The Triffin Dilemma of dollar hegemony and industrial hollowing out
1. The 'original sin' of the dollar as the world currency
The Triffin Dilemma: The dollar must meet global trade and reserve needs (continuously flowing out), while also maintaining currency stability (avoiding devaluation), which are mutually exclusive.
Result: The dollar has been long overvalued, resulting in cheap imported goods, loss of competitiveness for U.S. manufacturing, and exacerbation of industrial hollowing.
2. The essence of tariffs: Forcibly correcting the overvaluation of the dollar
If the dollar exchange rate cannot depreciate naturally through the market (due to central banks hoarding dollars), Trump attempts to artificially raise import costs through tariffs, thereby achieving a 'devaluation of the dollar' in disguise.
Case: If a 60% tariff is imposed on Chinese goods, it is equivalent to a 60% depreciation of the yuan against the dollar, thus 'protecting' American domestic industries.
3. Implications of soaring gold prices: Easing dollar credit
In recent years, central banks around the world (especially China) have been aggressively increasing their gold holdings instead of U.S. Treasuries, indicating a decline in trust in the dollar system.
Logical chain: U.S. debt expansion → Dollar credit impairment → Gold becomes an alternative reserve asset → The actual purchasing power of the dollar is questioned.
Three, Trump's 'three-step' strategy: Can it succeed?
1. Short term (Q2-Q3 2024): Create a crisis and force negotiations
Means: Increase tariffs → Strike at the global supply chain → Stock market crashes → Countries are forced to compromise (e.g., accepting U.S.-led trade rules).
Risk: If market panic gets out of control, it may trigger a liquidity crisis (similar to the 2018 QT crash).
2. Medium term (Q4 2024): Cut interest rates and expand the balance sheet, harvesting assets
Goal: Use the low prices after the crash to allow dollar capital to buy up global quality assets (e.g., Chinese new energy, European chip companies).
Obstacles: High inflation may limit the Federal Reserve's room to cut interest rates (data cooperation needed).
3. Long term (after 2025): Restructuring the dollar-trade system
Ideal outcome: Partial repatriation of manufacturing, moderate depreciation of the dollar, and narrowing trade deficits.
Pessimistic outcome: Countries accelerate de-dollarization, leading to the rapid collapse of dollar hegemony.
IV. Key controversy: Is Trump's strategy a 'brilliant move' or 'suicide'?
Supporting arguments
The U.S. still possesses technological, military, and financial hegemony, which is difficult to replace in the short term.
Historically, the U.S. has successfully adjusted its exchange rate through 'shock therapy' (e.g., the Plaza Accord in 1985).
Counterarguments
De-dollarization has become a trend: China, Russia, and the Middle East have established non-dollar settlement systems (e.g., yuan oil).
Tariffs may backfire: If they provoke global retaliatory tariffs, U.S. inflation will soar again, forcing the Federal Reserve to raise interest rates and exacerbate the debt crisis.
V. Solutions: Possible paths for the future
1. The way out for America
Short term: Reach a 'new trade agreement' with major economies (especially China), making some concessions in exchange for the continuation of the dollar system.
Long term: Promote 'manufacturing revival + energy independence', reduce external dependencies, and reshape the actual competitiveness of the dollar.
2. Responses from other countries
China: Accelerating the internationalization of the yuan (e.g., expanding the CIPS system), diversifying gold and commodity reserves.
EU/Japan: Promoting a local currency settlement alliance, reducing reliance on the dollar clearing system (e.g., INSTEX system).
3. Investor strategies
Hedging phase: Hold gold, Bitcoin (non-sovereign assets), and defensive stocks (utilities, essential consumer goods).
After the turning point: Buy global undervalued assets (e.g., Chinese tech stocks, European industrial stocks).
VI. Conclusion: A gamble, but time is not on America's side
Trump's tariff stick is a high-risk gamble, with the core being to force reforms through 'manufacturing crises.' But the question is:
Dollar hegemony has entered its 'twilight phase', and unilateralism may accelerate its decline.
Changes in the global power structure (the rise of China, multipolarity) make it difficult for the U.S. to replicate the hegemonic logic of the 20th century.
The final outcome may be:
Short term (1-2 years): Market volatility is severe, and the U.S. barely maintains an advantage.
Long term (5-10 years): The dollar system gradually collapses, and the world enters an 'era of multiple currency reserves.'
Advice to investors: Abandon the illusion that 'the dollar will always be strong' and prepare for the 'post-dollar era.'