Trump's tariff policy hits the pause button: a swift return of cattle or a new crisis?
Source: Talking about Li and Talking about the Outside
This morning (Beijing time, April 10), the market has seen a rebound, and I believe everyone knows what has happened, as there have been new changes in the U.S. tariff policy. Trump announced that over 75 countries have contacted the U.S. hoping to negotiate and have not taken retaliatory actions. He has authorized a 90-day suspension of the measure, imposing only a 10% reciprocal tariff (with China being the exception, where the tax rate will increase from 104% to 125%). As shown in the figure below.
Affected by Trump's policy news, U.S. stocks began to rebound rapidly, and at the same time, the cryptocurrency market also experienced a corresponding rebound, as shown in the figure below.
In the previous article (April 7), we mainly discussed Trump's tariff policy from the perspective of taxation and mentioned that the market seems to be completely influenced by Trump's policies. Today's market shows that Trump's power is still significant.
One Trump, one Powell (Federal Reserve), these two old men directly influence the trends of the global financial market. For most retail investors who have lost money (or are in floating losses) due to recent market volatility, they probably only want to say one thing: "These old men are really bad."
1. Review of Trump's Tariff Policy
Next, let's briefly review a series of Trump's operations on tariffs this year (Eastern Time):
On February 1, Trump announced a 25% tariff on most goods from Canada and Mexico, while imposing a 10% tariff on Chinese goods.
On February 3, Trump announced a 30-day delay in the tariff measures against Canada and Mexico.
On February 4, the U.S. tariff policy against China officially took effect.
On February 24, Trump announced that tariffs on goods manufactured in Canada and Mexico would resume on March 4, including a 25% tariff on most products and a 10% tariff on Canadian energy imports. He also canceled the tax exemption for low-value goods under $800 from these two countries.
On February 27, Trump announced an additional 10% tariff on all imported goods made in China starting March 4 (raising the total tariff rate to 20%).
On March 4, the U.S. officially imposed a 25% tariff on most goods from Canada and Mexico (with some exemptions). It also officially imposed a 20% tariff on all imported goods from China.
On April 2, Trump announced that starting April 5, a basic tariff of at least 10% would be imposed on all imported goods from over 100 countries and regions. Starting April 9, an additional 34% tariff would be imposed on China (adding to the previous 20% tariff, totaling a 54% increase).
On April 5 (00:01), the U.S. officially implemented a 10% global tariff on related countries.
On April 9 (00:01), the higher "reciprocal tariffs" against specific countries officially took effect, with the total tariff on Chinese imports reaching 104%.
On April 9 (around 1 PM): Trump announced a 90-day suspension of the reciprocal tariffs imposed on multiple countries, implementing only a 10% basic tariff, excluding China (while the tariff on China increased to 125%).
Here we have only listed the general timeline of several rounds of tariff wars. You can compare it with the corresponding market price trends. The topic of the game between the two major powers seems to be quite sensitive, so we won't discuss it further.
In any case, negotiations will likely happen sooner or later. Perhaps representatives have already been sent out to negotiate secretly; it just depends on how to find a suitable step down. After all, Trump, as a businessman, will not suffer losses, while the other side probably just needs to maintain "face."
2. What Should We Do Now?
Yesterday, a partner left a message asking me: What should we do in this market situation? Should we sell off part of our positions first?
There is actually no standard answer to this question, as everyone's situation is different. It mainly depends on your holding cost. Since Trump's tariff policy is always fluctuating, the short-term market seems to have no bottom in sight, and it may be accompanied by continued severe volatility.
If your current position is seriously affecting your sleep, and you are still fully invested, then you might consider reducing your position by an appropriate proportion to maintain some liquidity and reduce anxiety. Additionally, this question also depends on your time expectations. There cannot be a market that only goes up, nor one that only goes down. Currently, there are mainly three basic approaches:
Ignore short-term volatility and continue to buy quality assets like BTC on dips, holding them long-term (on a yearly basis).
Based on your overall position, holding cost, and risk tolerance, reduce your position partially while maintaining some liquid funds to observe changes (on a quarterly basis).
Use market volatility to seek swing trading opportunities, but the relative risk will be higher, and it may require a certain amount of time, energy, and skill (on a daily basis).
Alternatively, as mentioned in our previous articles, if you don't know what to do, the best action right now is "to do nothing."
In summary, for most ordinary investors, our advice remains unchanged: no matter when, try to ensure at least 10-20% of your position is in liquid funds, and always invest with a position size that feels comfortable to you. For long-term investments, just focus on the asset (like Bitcoin) without worrying too much about short-term price fluctuations. For short-term investments, think ahead about the maximum drawdown you can tolerate, and strictly set stop-loss and take-profit levels to avoid getting deeper into losses.
3. A Brief Discussion on the Cryptocurrency Market
Recently, everyone has been paying attention to Trump's tariffs while hoping for some substantial actions from the Federal Reserve… There are various onlookers, critics, and discussions about the global situation… As for the cryptocurrency market itself, it seems there are not many hot topics anymore, or rather, people are now rarely focusing on or discussing specific crypto projects.
Although many people now say we are in a full bear market, regardless of how others see it, from a longer-term perspective, we still believe Bitcoin is bullish, and the current position of $76,000 also looks like a decent support level. As shown in the figure below.
In simple terms, from a weekly perspective, we still have a chance (with a certain probability) to welcome a good new opportunity this year.
However, in the short term (daily perspective), due to the continued uncertainty of Trump's policies, we may experience further volatility and fluctuations. Theoretically, this fluctuation process could last for 2-3 months, or even longer, depending on whether any new black swan events occur. As for where Bitcoin will continue to retrace during this process, whether to $72,000, $68,000, or as some KOLs say, $55,000, we do not know.
We believe the core issue in the market remains a liquidity issue, meaning that in the coming months, the market may continue to face liquidity shortages unless the Federal Reserve takes some concrete actions. This liquidity shortage is actually caused by a combination of factors, such as the U.S. tax season in April (where taxes for the previous year must be filed by April 15), which may lead to some selling pressure, the U.S. government's debt ceiling issue that urgently needs to be resolved (the federal government may be unable to pay bills as early as August), and the rising probability of a U.S. economic recession (JPMorgan has raised the probability of a U.S. recession to 60%)… and so on.
At this point, some may ask, in your previous article, didn't you say that M2 is currently in a growth state? How can you now say there is a liquidity shortage?
Here we need to make a simple supplementary explanation. M2 refers to the broad money supply, which is a macroeconomic indicator measuring the total amount of money (fiat currency) in circulation, mainly including cash, demand deposits, and savings deposits. A higher M2 indicates more money, which usually represents ample global liquidity. However, ample liquidity does not necessarily mean that this liquidity will immediately flow into the market. In other words, M2 is a static measure, while liquidity is dynamic.
In a previous article (April 1), we mainly inferred (guessed) the potential direction of Bitcoin based on the trend of Global M2, as shown in the figure below.
In summary, we can use the Global M2 indicator to predict (guess) Bitcoin's potential trend. As long as M2 rises, BTC is likely to rise (though there may be some lag in timing).
Moreover, the Global M2 indicator is more suitable for observing BTC's trends rather than directly assessing altcoins. The overall situation of altcoins is quite special in this round, as there are too many altcoin projects (see our previous series of articles on altcoin seasons). If you hope to see more significant opportunities in altcoins, you may need to observe larger-scale or higher-level market liquidity changes, such as if the Federal Reserve really starts to cut interest rates, bringing about liquidity spillover effects.
If the hypothesis we mentioned in previous articles still holds, or if you believe in this point, then regardless of whether Bitcoin is currently at $82,000 or may continue to drop to the $70,000s or even the $60,000s, you can still consider accumulating in batches within the current fluctuation range.
Of course, this accumulation is just Plan A. To cope with possible market changes, you also need to have a Plan B ready. If during the execution of Plan A, a new black swan event or significant change occurs in the market, such as the crossover of the 21 and 55-week moving averages in the K-line chart above, leading the market to completely enter a bear market, then you need to be mentally prepared to hold for several more years.
As for our own plan, we will continue to maintain our original strategy, which is to hold Bitcoin without selling. The selling plan will strictly follow the established targets for gradual reduction. So far, we have only executed one selling operation in December 2024. As for the new round of dollar-cost averaging buying plan, we will tentatively consider or execute it starting in the third or fourth quarter of next year (2026). We have shared this in previous articles, so we won't elaborate further.
So far, 2025 seems pessimistic, but this year is destined to be extraordinary. The global situation is changing, and the macro cycle is shifting. If you can endure this winter, you will have the opportunity to see the vibrant spring next time.
