Scenario 1: Reciprocal Tariffs Only

This is a relatively mild option, based on adjustments to the most-favored-nation tariff differentials, which may not trigger significant market fluctuations. The U.S. dollar index may remain stable, and global reactions are likely to be restrained. However, a Citigroup report suggests that the probability of this mild scenario is low (25%), and the market does not seem optimistic about this 'soft landing'.

Scenario 2: Reciprocal Tariffs Plus Value-Added Tax

This policy is more aggressive, as the addition of a value-added tax will significantly increase import costs, potentially triggering a flight to safety. The dollar may strengthen as a result, especially against currencies like the euro and yen, while export-oriented countries like Germany and Japan will face greater pressure. Global stock markets may come under downward pressure, particularly those reliant on exports to the U.S.

Scenario 3: Aggressive Tariff Policy

If industry-specific tariffs (such as 25% on automobiles, semiconductors, pharmaceuticals, etc.) are layered on top of reciprocal tariffs and value-added taxes, this will be the scenario that worries the market the most. Such a comprehensive and targeted policy could trigger severe market turbulence: the U.S. dollar index may strengthen further, the dollar against the yen could plummet due to setbacks in Japanese automobile and semiconductor exports, and global stock markets may see significant corrections. At the same time, other countries may quickly implement retaliatory measures, further intensifying the risk of a trade war. Citigroup believes the market has begun to psychologically prepare for this scenario, and subsequent tariff retaliation may be a high-probability event.

Trump is brewing a more aggressive tariff policy, planning to implement 'indiscriminate tariffs', which means taxing most imported goods uniformly regardless of their country of origin. This move implies:

⚠️ Tariffs are not mild but comprehensive, indiscriminate, and beyond market expectations

⚠️ The global response may be strong, triggering an escalation of the trade war

⚠️ The Trump administration has never sent such an aggressive signal before.