"Liberation Day" is approaching, a gold pit or a grave pit of Trump?

So much to say, therefore, here is a long article to discuss Trump's reckoning day.

Trump's April 1 liberation day, or "reckoning day," is approaching, and many people still do not understand what Trump is trying to do.

Dolphin Research has previously mentioned that Trump's long-term goal is to bring manufacturing back, but it is hard to believe that an average tax increase of 10-15% will bring back manufacturing that has been hollowed out for decades.

Dolphin Research offers a line of thought, which may suggest that tariffs are both the goal and the means:

a. One is that it can somewhat increase revenue, filling the treasury a bit, combined with government fiscal tightening, to pave some fiscal space for future corporate tax cuts;

b. Another goal is to use tariffs along with military protection as bargaining chips for the second phase of dollar policy negotiations. Combined with the interview accepted by Bessent as the reckoning day approaches, it is hoped that through media dissemination, various countries will quickly extend olive branches and actively lower their own tariffs.

c. Will tariffs raise inflation? Bessent has consistently emphasized that they will not. His reasoning is:

Looking at the last round of the China-U.S. trade war in 2018, the outcome was a depreciation of the yuan and a slight appreciation of the dollar, which absorbed the pressure of tariffs, resulting in very little actual inflationary pressure within the U.S. Therefore, they believe that this round of tariffs, combined with traditional energy extraction, will anchor inflation without putting too much pressure on it.

Or even if there is slight inflation, as Bessent said, “the core of the American Dream is not access to cheap goods”; “not the essence of the American Dream” means that a small cost is not a problem.

After this first round of operations, domestic fiscal tightening + global taxation threaten global economic growth, making monetary easing a natural outcome, thus achieving Trump's long-held goal of lowering long-term bond yields and a certain degree of trade rebalancing.

As for the second step of pressure, what is the purpose of the part of the function that tariffs serve as a means? A bold guess might be monetary policy, or debt extension, at least negotiating some larger investment deals, similar to TSMC's investment in the U.S..

The ultimate goal is still the return of manufacturing and enhancing the export competitiveness of American-made products.

a. It is rumored that the Mar-a-Lago agreement states that through tariffs, surplus trade partners are required to exchange U.S. debt for longer-term low-interest bonds (the rumor is 100-year zero-interest bonds);

b. Forcing these partners to sign agreements similar to the Plaza Accord, which causes the currencies of competitor countries to appreciate, thereby lowering the price of the dollar, so that American manufacturing can enhance its competitiveness when exporting.

In the entire process of achieving these goals, it will almost offend allies, which is clearly not friendly to American multinational companies. Recent media reports from various overseas countries regarding various antitrust and tax investigations of American giants are obviously not favorable.

From the current trend, after country-specific tariffs, likely, industry-specific tariffs will likely also be added—namely, protective tariffs for key industry exports, which may indeed be unfavorable for semiconductors in the short term. However, in the long run, this long-term situation may to some extent protect the monopolistic position of these core technology industries, leading to a re-recognition of value from the overall macro environment perspective, throughout the process, the more certain factors are probably gold (if one wants to extend the duration of debt) and U.S. Treasuries. The goal is to bring the 10-year Treasury yield down to below 4% in conjunction with monetary policy, as there is still room for government bonds.

The U.S. stock market is likely to be the one that gets hurt—first due to early uncertainties, and second, as it enters the second phase where the dollar rises first and then falls. For foreign investors, investing in U.S. stocks may face two challenges: one is economic uncertainty, and the second is exchange rate losses.

Therefore, overall, Dolphin Research still believes that it is wise to patiently wait for high-quality dollar-denominated assets, such as Spotify, to fall back to reasonable price levels before making an entry based on risk assessment. Currently, although U.S. stock valuations have dropped, they are still not cost-effective enough, so a bit more patience is warranted.