The global market has experienced a 'Trump storm':
US stocks plummet, S&P 500 drops over 5% in two days, Nasdaq tech stocks bleed heavily;
Bitcoin crashes, with a 24-hour decline of over 15%, leveraged longs are wiped out;
Gold and crude oil both fall, while the panic index VIX soars, market risk aversion reaches a high since the 2020 pandemic.
Mainstream opinion points to Trump's 'crazy tariff policy,' believing it to be 'self-defeating' and even potentially triggering a global recession. But is the problem really that simple?
My core viewpoint:
Trump's tariff policy is by no means a 'spur of the moment' decision, but a proactive strike against the deep-seated contradictions of the dollar system.
The short-term goal is to create market panic, creating conditions for the Federal Reserve to cut interest rates and dilute debt; the long-term goal is to reconstruct the global trade order and save American manufacturing.
But this strategy carries extreme risks, potentially accelerating the collapse of dollar credit and even triggering backlash from the 'de-dollarization' wave.
Two, Deep logic: the Triffin Dilemma of dollar hegemony and the hollowing out of manufacturing
1. The 'original sin' of the dollar as a world currency
The Triffin Dilemma: the dollar must meet global trade and reserve needs (continuous outflow) while maintaining currency stability (avoiding depreciation), and both cannot be achieved simultaneously.
Result: the dollar is long-term overvalued, leading to cheap imported goods, loss of competitiveness in American manufacturing, and increased hollowing out of industries.
2. The essence of tariffs: forcibly correcting the overvaluation of the dollar
If the dollar exchange rate cannot depreciate naturally through the market (due to central banks hoarding dollars), Trump attempts to artificially raise import costs with tariffs, indirectly achieving the 'devaluation of the dollar.'
Case: If a 60% tariff is imposed on Chinese goods, it is equivalent to a 60% depreciation of the renminbi against the dollar, thereby 'protecting' American domestic industries.
3. The implication of soaring gold prices: dollar credit is loosening
In recent years, central banks (especially China) have been aggressively accumulating gold instead of US Treasury bonds, indicating a decline in trust in the dollar system.
Logical chain: US debt expansion → dollar credit damage → gold becomes an alternative reserve asset → dollar's real purchasing power is questioned.
Three, Trump's 'three-step' strategy: can it succeed?
1. Short term (Q2-Q3 2024): create a crisis, force negotiations
Means: increase tariffs → hit global supply chains → stock market plummet → countries forced to compromise (e.g., accept US-led trade rules).
Risk: if market panic spirals out of control, it could trigger a liquidity crisis (similar to the QT crash in 2018).
2. Mid-term (Q4 2024): cut interest rates and expand the balance sheet, harvest assets
Goal: use the low prices after the crash to allow dollar capital to buy undervalued global assets (e.g., Chinese new energy, European chip companies).
Obstacles: high inflation may limit the Federal Reserve's space for cutting interest rates (data cooperation is needed).
3. Long term (after 2025): reconstructing the dollar-trade system
Ideal outcome: partial return of manufacturing, moderate depreciation of the dollar, narrowing trade deficit.
Pessimistic outcome: countries accelerate de-dollarization, dollar hegemony rapidly collapses.
Four, Key controversy: is Trump's strategy a 'brilliant move' or 'suicide'?
Supporting arguments
The US still has technological, military, and financial hegemony, which is difficult to replace in the short term.
Historically, the US has successfully adjusted exchange rates through 'shock therapy' (e.g., the Plaza Accord in 1985).
Opposing arguments
De-dollarization has become a trend: China, Russia, and the Middle East have established non-dollar settlement systems (e.g., renminbi for oil).
Tariffs may backfire: if it triggers global retaliatory tariffs, US inflation will soar again, forcing the Federal Reserve to raise interest rates, exacerbating the debt crisis.
Five, Solutions: Possible paths for the future
1. America's way out
Short term: reach a 'new trade agreement' with major economies (especially China), making some concessions in exchange for the continuation of the dollar system.
Long term: promote 'manufacturing revival + energy independence,' reduce external dependence, and reshape the real competitiveness of the dollar.
2. Responses from other countries
China: Accelerate the internationalization of the renminbi (e.g., expand the CIPS system), diversify gold and commodity reserves.
EU/Japan: Promote local currency settlement alliances, reduce dependence on the dollar clearing system (e.g., INSTEX system).
3. Investor strategies
Hedging phase: hold gold, bitcoin (non-sovereign assets), defensive stocks (utilities, essential consumer goods).
After the turning point: buy undervalued global assets (e.g., Chinese tech stocks, European industrial stocks).
Six, Conclusion: a gamble, but time is not on America's side
Trump's tariff stick is a high-risk gamble, its core is to force reform through 'creating crises.' But the question is:
Dollar hegemony has entered its 'twilight phase,' and unilateralism may accelerate its decline.
Changes in the global power structure (the rise of China, multipolarity) make it difficult for the US to replicate the hegemonic logic of the 20th century.
The final outcome may be:
Short term (1-2 years): market volatility, the US barely maintains its advantage.
Long term (5-10 years): the dollar system gradually collapses, the world enters an 'era of multi-currency reserves.'
Advice for investors: abandon the fantasy that 'the dollar will always be strong' and prepare for the 'post-dollar era.'