Using a milk tea shop to analogize tariff policies: His initial target was only China

Author: Bai Ding

On April 9, 2025, the global financial market experienced a dramatic turn— the United States suddenly announced a suspension of tariff increases on other countries, targeting only China with a 125% tariff. This "tariff showdown" completely tore away the last veil of globalization. Some say a new Cold War has begun.

Traditional Skills: "Precision Strikes" on the World's Number Two

This round of tariff war seems to be Trump's "arbitrary play," but in reality, it is a precise strike by the United States against the "world's number two." History often repeats itself— in the 1980s, Japan rose with its automotive and electronics industries, reaching 70% of the U.S. GDP. The U.S. then forced Japan to sign the Plaza Accord, leading to yen appreciation, export collapse, and an economy trapped in "the lost thirty years." The current script is almost a replay, with the protagonist now being China. The Trump team has publicly stated: "China is like Japan back then, but larger and more ambitious; we must lock down its development space before it surpasses the United States."

Unlike Japan, China holds a trump card: a consumer market of 1.4 billion people. However, the situation remains grim. China is a country with overcapacity, heavily reliant on exports. The severity of this round of tariffs lies in the fact that the U.S. is no longer acting alone but is building an "anti-China alliance" by testing compliance among allies, aiming to cut off China's exports. For example, German car manufacturers, having received tariff exemptions, quickly announced a reduction in their reliance on Chinese supply chains; Mexico seized the opportunity to take over textile orders from China. This "boiling frog" style encirclement is more lethal than a direct confrontation.

The true goal of the United States is to stifle China's industrial upgrade path by curbing exports. New energy vehicles, photovoltaics, semiconductors—these core industries that are being taxed are precisely the key areas for China's transition from "the world's factory" to "a technological powerhouse." If these industries are suppressed, China may be forced to remain in low value-added segments for a long time, repeating Japan's "lost thirty years" fate.

The Dilemma of the Milk Tea Shop

To understand the impact of this tariff war on ordinary people, let's use a milk tea shop as an analogy.

Suppose your milk tea shop (China) is suddenly targeted by the local market leader (the U.S.), which claims, "Your milk tea uses my exclusive recipe—black sugar pearls," prohibiting customers from shopping at your place and threatening other milk tea shops not to source from you. At this point, you have three choices:

Option One: Take the Risk to Open Up

You decide to offer your raw material recipes for free to all milk tea shops that do not comply with the market leader, even allowing them to sell their products directly in your shop. In the short term, the milk tea shops on this street may be moved by your sincerity and continue to seek cooperation with you, bypassing the market leader. But the risks are evident:

Recipe Leakage Risk: Other milk tea shops may steal your core technology (like new energy batteries, 5G patents) and turn into competitors.

Layoffs of Your Employees: "External aid" from other milk tea shops may push out your long-time employees (local businesses).

Cash Flow Break: The cost of supplying for free may drain your cash flow (pressure on foreign exchange reserves).

A real case is evident: when China joined the WTO in 2001, the automotive industry was fully opened, and Volkswagen and General Motors from the U.S. rushed in. Twenty years later, although domestic cars have started to catch up, 90% of local brands were eliminated during this period, and millions of workers experienced layoffs.

Option Two: Endure and Innovate

You publicly bow to the market leader, promising not to use the "controversial recipe," but secretly develop a more powerful "black sugar pearl 2.0." This strategy helped you avoid disaster in 1999 (when the U.S. bombed the Chinese embassy in the former Yugoslavia), but the environment is now completely different:

Customer Trust Crisis: Regular customers (domestic consumers) feel you lack "backbone," leading to a backlash in customer sentiment.

R&D Costs Soar: You must deal with the market leader's inspections while secretly innovating, putting immense financial pressure on you (technology sanctions have caused prices of key components like chips to skyrocket).

Time is Not on Your Side: If the market leader discovers you are still making small moves, they may directly shut down your shop (escalating sanctions).

After being sanctioned, Huawei's mobile phone business fell from second in the world out of the top five, forcing it to invest hundreds of billions in developing Kirin chips. This process supported China's semiconductor industry chain but also led to a 40% increase in mobile phone prices, forcing consumers to pay the price.

Option Three: Do Nothing

You neither open up nor innovate, watching helplessly as customers are driven away by the market leader. Soon, you will face:

Raw Materials Piling Up and Expiring: The milk tea you made (overcapacity) has no buyers and must be poured down the drain (business bankruptcy).

Employees Collectively Demanding Wages: The shop staff (unemployed population) may block the shop entrance to protest (social unrest).

Desperate Measures: To divert attention, you suddenly report a neighboring vendor for using gutter oil (creating external conflict), resulting in a backlash from the entire street (international isolation).

In the early stages of the China-U.S. trade war in 2018, a coastal foreign trade factory saw orders plummet by 50%, and the owner fled overnight, leading 3,000 workers to block the government demanding wages, ultimately forcing local finances to cover the losses.

If I were the owner of the milk tea shop and had to choose, I would rather take the plunge—open the doors to welcome foreign investment competition, even if local businesses would be hurt, even if the financial system would be impacted, but at least I would have the initiative in my hands, and winning or losing would be straightforward; if the cost is too high, I can also grit my teeth and compromise, like twenty years ago, enduring and accumulating strength, temporarily bowing my head for twenty years of economic takeoff; my worst choice would be to neither dare to open up nor have the strength to fight back, ultimately being driven to the brink by overcapacity and unemployment.

Regardless of the path chosen, ordinary people must prepare for the following: imported cars and iPhones may rise by 30%, domestic new energy vehicles may take the opportunity to raise prices; layoffs in foreign trade, real estate, and education training industries may intensify. In summary, the purchasing power of cash will definitely decline. The feeling that will hit you is: why are things expensive again?

Safe-Haven Assets

As great power competition escalates, traditional safe-haven assets have shown signs of fatigue: gold prices have fluctuated around $2,500 per ounce after breaking through, and government bond yields have been distorted due to central bank interventions; even the Swiss franc is no longer absolutely safe due to the UBS crisis. Perhaps at this time, we can shift our focus back to Bitcoin, which has never fallen below 80,000.

Bitcoin is not directly manipulated by any national policy. When the RMB exchange rate plummeted due to the tariff war, Chinese investors frantically bought USDT (a crypto stablecoin pegged to the dollar 1:1), indirectly pushing up Bitcoin prices; U.S. retail investors, worried about the depreciation of the dollar, directly used Bitcoin as a hedging tool. This cross-border, spontaneous consensus has made Bitcoin the only asset not influenced by geopolitical factors.

Russian exporters use Bitcoin to settle oil transactions, bypassing the SWIFT system blockade; Chinese cross-border e-commerce pays Southeast Asian suppliers through cryptocurrencies to avoid exchange rate losses. Even some central banks of certain countries have quietly increased their holdings of Bitcoin as foreign exchange reserves—El Salvador's President Bukele openly stated: "Bitcoin is our shield against dollar hegemony."

In countries like Egypt and Pakistan, where there is a shortage of dollars, Bitcoin has become hard currency for private trade. Despite its volatility, in regions where fiat currency credibility has collapsed, people would rather endure fluctuations than hold worthless paper. This underlying demand is reshaping the value logic of Bitcoin.

Putting all this aside, let's return to the fundamental issue: assets with a fixed total supply that are suitable for storage are inherently suitable as safe-haven assets and means of value storage in the economic system. Gold is one, and Bitcoin, due to its immutable protocol, is even more so.

Asset Allocation Strategy for Small Users of Milk Tea Shops

First, let's talk about holding cash; we can rephrase it as holding the national fiat currency. Fiat currency is merely a medium of circulation in the economic system, lacking any inherent anti-depreciation properties. Holding a large amount of fiat currency may seem safe, but it faces double risks: first, domestic currency depreciation (for example, the RMB has fallen 12% against the dollar this year), and second, bank interest rates failing to keep up with inflation. In the first quarter of 2025, China's CPI rose by 5.3% year-on-year, while the one-year deposit rate was only 1.8%, resulting in a real purchasing power decline of 3.5% per year.

Now let's consider holding gold. Although gold can serve as a safe haven, it has at least two fatal flaws: it cannot be quickly circulated (gold shops may offer a buyback discount of up to 20%) and is difficult to divide (retail investors who cannot afford a whole gold bar can only choose paper gold, which is essentially a financial derivative). We often say that Bitcoin and gold are in a competitive relationship; in terms of fixed total supply and suitability for storage, they are roughly equal (Bitcoin is even more suitable for storage), but in terms of rapid circulation and divisibility, Bitcoin wins hands down.

The remaining choice is clear. Bitcoin is not a gambler's lottery ticket but a lifeboat for the clear-headed. Its value lies not in getting rich overnight but in providing a backup system independent of sovereign credit.

Historical Cycle

Looking back at the Great Depression of the 1930s, the tariff war once dragged the global economy into the abyss, ultimately culminating in a world war. Today, the United States has resumed its tariff stick, but the world is entirely different— the emergence of Bitcoin has provided ordinary people with a safe-haven tool never seen before in history. This does not mean that Bitcoin can eliminate crises, but it creates a possibility: when governments around the world tear each other apart to maintain hegemony, individuals can at least protect their labor results through a parallel world constructed by code.