Trump uses tariffs as a chess piece, attempting to reshape the economic landscape, yet his strategy's fragility is exposed amid market turbulence and social backlash.

Written by: Luke, Mars Finance

In early April 2025, Trump ignited a global economic storm with a 10% comprehensive tariff policy. From the failure of gold as a safe haven to the evaporation of $5.4 trillion in U.S. stock market value, followed by waves of protests and urgent negotiations from the business community, this crisis resembles a high-stakes gamble, testing investors' judgment. This article will analyze the logic behind the chaos from four perspectives: financial chain reactions, Trump's "economic revolution," social and business backlash, and historical lessons with investment prospects.

1. Financial Chain Reactions Under Tariff Shock: Why Did Gold Fail?

With the implementation of Trump's tariffs, global stock markets lost $6.6 trillion, and the U.S. stock market lost $5.4 trillion in just two days, affecting 400,000 accounts significantly. Surprisingly, gold, a safe-haven asset, was not spared, dropping 1.9% on April 5. What is the reason?

The answer lies in the chain effect of leveraged trading. High leverage in the futures market amplified the decline in U.S. stocks, triggering "margin calls" for investors. To avoid forced liquidation, they sold gold and other highly liquid assets to make up for margin requirements. Gold ETFs saw a sudden drop of 2.3% in holdings that day, confirming this pressure. This short-term sell-off is driven by trading sentiment rather than macro trends. Once the market stabilizes, funds may flow back into gold, but for now, the logic of safe-haven assets has been overturned by liquidity demands.

Meanwhile, WTI crude oil fell below $60 per barrel, weakening inflation expectations. Oil has significant weight in the U.S. CPI, and its price decline offset the price pressures from tariffs, prompting the interest rate futures market to push the Federal Reserve's rate cut expectations to five times. In the balance between inflation and recession, the Fed is more inclined to stabilize growth. This signals to investors: short-term safe-haven assets may come under pressure, but rate cut expectations could benefit bonds and growth stocks.

2. Trump's "Economic Revolution" and Wall Street's Shock: Lessons from Hoover

Trump's attitude towards the crisis is clear. On April 5, he declared on the Truth platform: "This is an economic revolution, and we will definitely win." He hinted that the stock market crash was "intentional," aimed at reshaping trade patterns. However, this gamble caught Wall Street off guard.

Treasury Secretary Bentsen, once seen as a bridge to the financial community, was rumored to be leaving on April 6 due to "ridiculous tariff algorithms." MSNBC revealed that he only analyzed scenarios in White House meetings, while decisions were actually led by Peter Navarro, Howard Lutnick, and Jamieson Greer. With no help from Wall Street, JPMorgan predicted U.S. GDP growth would drop to -0.3%, sounding the alarm for recession.

Historical figure Hoover provides a mirror. In 1929, Hoover ignored opposition from financial groups and pushed for the Smoot-Hawley Tariff Act, raising tariff rates to 59%, which triggered a global trade war and ultimately exacerbated the Great Depression. Trump's current high-stakes gamble is similar, but his team has traded a 20% drop in U.S. stocks for a dollar drop to 101 points and five rate cut expectations, without triggering a substantial recession (April 5 employment data remained robust). This aligns with his goals of a weak dollar and low interest rates, but supply chain disruptions and plummeting stock prices have left businesses in distress. Investors should be wary: short-term policy benefits may mask long-term risks.

3. Social Backlash and Correction Pressure: Initial Market Signals Emerge

Market turmoil quickly ignited social anger. On April 6, the "Let Go!" movement swept over 1,000 cities worldwide, with protesters opposing tariffs, federal layoffs, and Musk's DOGE department. In Washington's National Mall, slogans like "Penguins Against Tariffs" and "Make My 401k Great Again" directly addressed the policy's impact on the middle class. Tesla became a target due to Musk's alliance with Trump, with showrooms in the U.S. and Europe frequently attacked, and anti-Musk sentiment rising.

The business community chose more direct action. On April 5, tech journalist Kara Swisher revealed that a group of tech and finance leaders went to Mar-a-Lago to "discuss common sense" with Trump. These individuals, who had donated millions for his inauguration, now faced trillions in losses and viewed Musk as a potential pressure point. Meanwhile, rumors of Bentsen's departure and the tariff power bill proposed by Republican Senator Chuck Grassley indicate that internal and external pressures are forcing Trump's team to confront correction choices. Texas Senator Ted Cruz warned: "Comprehensive tariffs will destroy jobs and severely impact the economy." The confidence of policy implementers is facing severe challenges from reality.

4. Learning from History and Investment Choices: Safe Haven or Bottom Fishing?

Is this storm a technical adjustment or a prelude to a substantial recession? The answer depends on policy space and correction capability. The Federal Reserve still has about 400 basis points of room to cut rates (assuming the current rate is 4.8%), and the interest saved from a 100 basis point cut far exceeds the fiscal tightening of Musk's DOGE department. If economic data does not deteriorate comprehensively, asset declines may present a good bottom-fishing opportunity. However, cuts in research funding (such as NIH) and global retaliatory tariffs may weaken U.S. long-term competitiveness, as the trade war consequences from Hoover's era serve as a cautionary tale.

The political dimension is equally crucial. The 2026 midterm elections are a concern for Trump; if both houses lose majority control, his policies will face significant hurdles. This may explain his motivation to create "results" in the short term. Currently, the speed of Trump's team's corrections—such as the outcomes of the Mar-a-Lago talks—will become a barometer for the next phase. If they can properly balance short-term turbulence with long-term goals, this "economic revolution" may have a turning point; if they repeat Hoover's mistakes, the consequences could be dire. Investors may consider the following strategies:

• Short-term: Focus on bonds and defensive stocks under rate cut expectations, avoiding high-leverage assets.

• Mid-term: If policy corrections succeed, undervalued U.S. stocks and gold may rebound.

• Long-term: Be wary of escalating trade wars and diversify investments into emerging markets to hedge risks.

Conclusion

Trump uses tariffs as a chess piece, attempting to reshape the economic landscape, yet his strategy's fragility is exposed amid market turbulence and social backlash. His team has demonstrated the ability to manipulate the market, but Hoover's lessons remind us that the cost of obstinacy can be high. Your next investment step depends on weighing the short-term chaos against long-term trends. Understanding the game is key to finding opportunities amid the crisis.

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