At the macro level, the U.S. tariff and monetary policy game has once again become the focus. Earlier reports revealed that the average tariff in the U.S. for 2024 is 2.5%, and the reciprocal tariffs for some countries will be stacked upward based on a 10% foundation, resulting in a minimum of 20% when combined with the base tariff, which is eight times the average tariff for 2024.
In the U.S., Trump announced a 25% tariff on goods imported from Japan and South Korea starting August 1. This move means that the U.S. has begun to implement a unilateral tariff policy against countries with which it has not reached trade agreements, with Japan and South Korea being among the first targets of the trade demands and agreements that Trump promised to intensively release this week.
From the perspective of tariff levels, the 25% tariff imposed on Japan and South Korea is only slightly higher than the expected 20% by 5%, which is not a significant increase and leaves room for adjustment. As long as Japan and South Korea meet the conditions for opening up to the U.S. and tax reductions, there is still a possibility for a lower tax rate. The current bottom line for the U.S. may be 15%, but this bottom line may not be implemented all at once; it may start at 20% and gradually decrease. Trump is accelerating the reform of U.S. trade policy during his second term, which continues to bring uncertainty to the market, central bank officials, and corporate executives. All parties are struggling to assess the impact of this policy on production, inventory, hiring, inflation, and consumer demand. It is important to note that even without such a volatile tariff policy, regular business planning is not an easy task.
Looking back at history, Trump initially planned to impose a 24% tariff on Japan and a 25% tariff on South Korea, and after a 90-day delay for so-called reciprocal tariffs, reduced the tariffs to 10% to allow time for negotiations. The letter released this time shows that the tariff levels for Japan and South Korea are basically in line with his previous warnings.
The market's reaction to the tariff policy has been quite direct. The tariffs facing Japan and South Korea are already at a relatively high level, and the yet-to-be-announced tariff situation regarding Long Ge has raised market concerns. However, there are also some positive signals, as the EU has indicated it is still open to negotiations and has reached some agreements with the U.S., expecting a minimum tariff of 20%.
In this series of trade games, every time the tariff issue regarding Long Ge arises, the market experiences fluctuations. After the announcement, U.S. bonds began to rise, with both 20-year and 30-year Treasury yields breaking through 4.9%. This puts considerable pressure on Trump, renewing the pressure for interest rate cuts on the Federal Reserve, but Powell seems to be unresponsive. Consequently, Trump may quickly select a new Federal Reserve chairman to stabilize the market. It can be said that the third quarter will be a critical period for monetary policy and tariff games, and its difficulty is self-evident.
On-chain data shows that the turnover rate remained very low on Tuesday, perhaps because American players have not yet started working. However, the reduced turnover rate puts relatively little pressure on prices. Current market sentiment is poor, mainly due to concerns that Trump may take new actions on July 9.
Overall, in the short term, Bitcoin is still in a range of fluctuations. Currently, Bitcoin is concentrated in the range of $104,000 to $108,500, with a stock of 1.188 million coins, forming the first support level; $93,000 to $98,000 is the second strong support level. It is worth noting that the U.S. stock market is reacting mildly, while Bitcoin is currently highly correlated with the U.S. stock market, so the movements of the S&P and Nasdaq may indicate Bitcoin's trends.