How will Trump's "4/2 Liberation Day" tariff bomb affect the Crypto Assets market?

This imminent tariff policy is regarded by the Trump administration as a key step in reshaping the US trade pattern. However, as policy details emerged, the market questioned its strength and impact. In this global game, both the traditional market and the crypto field are affected, and April 2 will reveal the future direction. This article is from Luke, an article by Mars Finance and reprinted by Foresight News. (Synopsis: JPMorgan Chase: The risk of Trump's tariff war is gradually clear, it's time to "stop selling on the high" U.S. stocks) (Background supplement: Fed Postic: This year's expected "only 1 rate cut" tariff war hinders the expansion effect, Trump presses Powell to cut interest rates again) There is less than a week left before the much-anticipated "April 2 tariff landing day". This day, dubbed "Liberation Day" by the Trump administration, carries the ambition to reshape the U.S. trade landscape. However, as the media has become popular, the script of this policy drama does not seem to be as radical as the outside world expects. At the same time, the crypto market – an area that is particularly sensitive to macro turmoil – is also in the shadow of tariffs. The "gentle turn" of the tariff landing day? The latest news shows that the April 2 tariff policy may not fully deliver on the grand blueprint previously painted by Commerce Secretary Lutnick. He had envisioned a "three-layered" tariff system: based on reciprocal tariffs, supplemented by industry- and country-specific tax increases. However, recent rumors suggest that the latter two may back down. It's like a well-prepared feast, only to end up with a light set menu – less condiments, but the main course is still there. Why this adjustment? The reason is not difficult to speculate. The Trump team knows that tariffs are a double-edged sword. Since taking office, its trade policies have caused global markets to experience violent turbulence: the U.S. stock market has lost trillions of dollars, supply chain pressures have pushed up prices, and even eggs have become a "luxury." If tariffs are pushed to the limit at this time, the US economy may be the first to come under pressure. Goldman Sachs economists warn that despite the apparent calm, there is a risk of "negative surprises" lurking behind this "moderate posture". The market expects a reciprocal tariff rate of about 9%, but Goldman Sachs estimates the actual figure could double to 18%. This gap is enough for traders to hold their breath and wait for their boots to hit the ground. At the same time, the Unfair Trade Practices Review Report, which will be released on April 1, will be a key bellwether. This report will reveal the tendency of the United States to investigate trading partners, directly affecting the pace and intensity of subsequent tariffs. If the report accuses certain countries of "wool" behavior, Trump may take the opportunity to increase the weight; If the tone is soft, the market may usher in a short respite. In any case, this report will be a trailer for interpreting the plot of "Liberation Day". Trump's Abacus – Fair, Fair, or TMD Fair? To understand the logic of the landing of tariffs, you may wish to listen to the statements of the core members of the Trump team. Recently, Treasury Secretary Bescent and Commerce Secretary Lutnick spoke out in the All-in Podcast. Lutnick looks back on history and points out that between 1880 and 1913, the United States relied entirely on tariffs to maintain its finances without income tax. After World War II, in order to support global reconstruction, the United States took the initiative to reduce tariffs, but other countries retained high barriers and became the "most open trade" sufferers. For example, a U.S. car export country is subject to a 20% tariff, while the other party's vehicle only enters the U.S. at 5%. This asymmetry made Trump rise up and say bluntly: "Fair, fair, or fucking fair!" Trump's intentions are clear: first, to protect local industries through tariffs and attract manufacturing to return; The second is to generate revenue for the treasury and fill the $2 trillion deficit. Lutnick threw out the "troika" plan: tariff increases, sovereign fund investment, and the "immigration gold card" program, the latter of which is said to sell 1,000 copies a day, and Trump more optimistically expects to attract 1 million buyers. As for the other half of the deficit, it is expected that the "Ministry of Government Efficiency" will cut waste spending by 1 trillion. The department's goal of removing 25% of the $6.5 trillion in annual fiscal spending sounds ambitious, but it is undoubtedly a frightening step to implement. Treasury Secretary Benson analyzed the problem from a macro perspective, listing three major pain points of the US economy: high debt, uncontrolled inflation, and manufacturing recession. His prescriptions include cutting spending, reshaping the trading system and reviving the middle class. Unlike Lutnick's radicalism, Bessent emphasized "gradualism" to avoid a drastic recession. White House economic adviser Stephen Milan also added in an interview with Bloomberg that the United States, as the world's largest consumer market, holds the trump card of negotiation and has the ability to force opponents to bow down. This confidence comes from strength, but whether it can be converted into a victory depends on how the opponent takes it. The landing of tariffs may present two paths: First, the opponent compromises, reduces tariffs on the United States, the United States wins, and the US stock market rises; The second is-for-tat, Trump is forced to increase the weight, short-term lose-lose, and U.S. stocks are under pressure. In the short term, the latter probability is higher, after all, few people in the global game are willing to be the first to show weakness. But in the long run, with the chips in the consumer market, the United States may be able to gradually reverse the trade imbalance. The US Federal Reserve's Slow Response and the Unfinished Bottom of U.S. Stocks The uncertainty of tariff policy not only affects the trade pattern, but also transmits to the capital market through inflation and monetary policy. Looking back at 2020, the COVID-induced surge in inflation caught the US Federal Reserve off guard. At first, the US Federal Reserve firmly believed that inflation was "transitory", but by the end of 2021, Chairman Powell had to admit a mistake of judgment to Congress, announce the abandonment of the word "transitory", and then start a cycle of sharp interest rate hikes. According to Bloomberg (see Chart 1), the U.S. economic policy uncertainty index soared to more than 500 points at the beginning of the epidemic, hitting a historical peak, and then declined, but events such as the Russia-Ukraine conflict in 2022 and Trump's tariff policy in 2024 once again pushed up uncertainty, and the index has hovered at a high of 200 points, far exceeding the average from 1995 to 2019. The US Federal Reserve has been equally slow to respond to the impact of tariffs. Tariffs-induced supply chain pressures and rising prices have significantly boosted inflation expectations over the past few years, but the US Federal Reserve is more inclined to reassure the market with dovish statements. However, this reassurance can only lead to a short-term rally in US stocks, not a trend reversal. The reason is that the biggest uncertainty in the market – the direction and strength of tariff policy – remains unresolved. From Chart 1, the economic policy uncertainty index has been accompanied by a sharp correction in U.S. stocks at historical nodes such as the "9/11 terrorist attacks", "global financial crisis" and "sovereign debt crisis", and the current level of uncertainty indicates that the bottom of U.S. stocks may not yet come. The market may need to wait for tariff policy to become clearer, or for a more dramatic macro-view shock to trigger a full reshuffle. The recent performance of the S&P 500 further confirms this concern. According to Bloomberg and MacroBond, the S&P 500 has fallen 7.8% since its February high, and even fell as much as 10% last week. Historically, if the S&P 500 falls by at least 5% on average over the next five months, the US economy is likely to fall into recession (yellow line in Chart 2). Conversely, if the S&P 500 recovers lost ground in the next 4 to 5 months, it can hope to avoid an economic downturn (black line in Exhibit 2). However, these figures are only averages, and if the economy does enter a recession, US stocks could fall by at least 20%. It is worth noting that market sentiment sometimes amplifies volatility, such as in 2022...