Trump announced a 10% baseline tariff on global goods and threatened to impose exceptionally high 'reciprocal tariffs' on 88% of countries. It seems like a thunderous move, but it’s actually a smokescreen; what he truly aims to implement is just the 10% baseline tariff.
Global public opinion is captivated by 'reciprocal tariffs', ignoring the core fact that most high tariffs will ultimately find excuses to be canceled. This is merely a negotiation tactic commonly used by Trump; he first throws out extreme conditions, then makes concessions to achieve his original plan, and in the end, countries believe they have won. Just look at his strategy towards Canada and Mexico back then to understand—bluffing, and then advancing at his own pace.
Essence: The 'invisible usage fee' of the dollar
This 10% global tariff is essentially an invisible usage fee for the dollar. Trump has long complained that the global use of the dollar leads to overvaluation, impacting American manufacturing, while high U.S. debt burdens the treasury. Therefore, he found a disguised method—by artificially lowering the actual purchasing power of the dollar through global tariffs, weakening the external economy's 'overdraft' on the dollar, benefiting domestic industries in the U.S.
The dollar is being effectively devalued, with far-reaching implications.
This is not a simple adjustment of exchange rates, but rather a real decline in the purchasing power of the dollar. In other words, the consumption capacity of Americans at home has shrunk by 10%, while the exchange rate appears unchanged, its impact is permeating globally. In the long run, the market needs time to adapt to this change, and the cost of dollar hegemony is becoming evident.
