Red Alert for the US and Europe! It is not advisable to bottom out at this moment!
Last night, Trump posted on social media attacking Europe and proposed a 50% tariff, which is no small matter! This has disrupted the positive narrative in the cryptocurrency market this month, and currently, global capital is watching closely. With three consecutive days of US market closures, it will be difficult to sustain the upward momentum in the short term without significant good news!
Trump's post last night was actually a venting of long-standing disdain for Europe and a showdown, merely expressed through tariffs. In short: the strategic interests of the US and Europe are now completely inconsistent globally, even somewhat oppositional, although they have not completely fallen out.
1. Structural obstacles to achieving a tariff agreement between the US and Europe:
The EU's legislative mechanism is complex: amending EU laws (such as the Digital Sovereignty Act, Services Act) requires unanimous consent from 27 countries, leading to extremely low negotiation efficiency.
The issues concerning the US cannot be responded to quickly: the US is concerned about digital services, free flow of data, etc., while Europe sets barriers under the pretext of "data security," essentially to protect local industries and impose taxes on US companies.
2. Strategic divergences on the geopolitical level:
The US's strategic focus has shifted eastward: the US has shifted from "focusing on Europe and neglecting Asia" to "focusing on Asia and neglecting Europe."
In the Russia-Ukraine war, the US is disappointed with Europe, believing that EU countries (especially Germany) have adopted a policy of appeasement towards Russia, undermining the US's willingness to provide security support.
Europe is unwilling to increase military spending but hopes to continue enjoying military protection provided by the US. The US sees this as an "unfair burden distribution."
3. Declining economic and technological competitiveness of the EU:
EU industries are aging, still reliant on traditional industries from the 20th century (such as automobiles, agriculture). Emerging high-tech fields such as AI and chips have been left behind by the US and East Asia. Gradually falling out of the ranks of "leading countries," the EU's position in the global value chain is declining.
4. There is a fundamental divergence in trade and security interests between the US and Europe. Even if some compromises are reached in the short term, structural differences will persist in the long term. I believe that if Europe does not make significant concessions, the possibility of a renewed US-Europe tariff war is very high.
5. The capital market is fundamentally not afraid of US sanctions on Iran, Russia, or North Korea; these are all within expectations. However, the US imposing sanctions on its own allies is completely beyond market expectations for negative news!
Don't rush to bottom out; it’s wise to wait and see!
