After $6.6 Trillion Vanished Globally: An Investment Survival Guide from Historical Lessons
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After $6.6 Trillion Vanished Globally: An Investment Survival Guide from Historical Lessons
Trump used tariffs as a strategic move to reshape the economic landscape, yet exposed the fragility of his approach amid market volatility and social backlash.
Navigating Web3 tides with focused insightsAuthor: Luke, Mars Finance
In early April 2025, Trump ignited a global economic storm with his 10% blanket tariff policy. From the failure of gold as a safe-haven asset to the U.S. stock market losing $5.4 trillion in value, followed by waves of protests and emergency business negotiations, this crisis resembled a high-stakes gamble testing investors' judgment. This article analyzes the logic behind the chaos across four dimensions: financial chain reactions, Trump’s "economic revolution," societal and corporate backlash, and historical lessons alongside investment outlook.
1. Financial Chain Reaction Under Tariff Shock: Why Did Gold Fail?
Upon implementation of Trump's tariffs, global equities erased $6.6 trillion in value, with U.S. stocks losing $5.4 trillion within two days—shrinking 400,000 accounts significantly. Surprisingly, even gold, a traditional safe-haven asset, was not spared, dropping 1.9% on April 5. Why?
The answer lies in the domino effect of leveraged trading. High leverage in futures markets amplified losses in U.S. equities. As unrealized losses triggered margin calls, investors sold highly liquid assets like gold to meet margin requirements and avoid forced liquidation. Gold ETF holdings plunged 2.3% that day, confirming this pressure. This short-term selloff was driven by trading sentiment rather than macro trends. Once markets stabilize, capital may flow back into gold. For now, however, liquidity demands have overridden traditional safe-haven logic.
Meanwhile, WTI crude oil fell below $60 per barrel, weakening inflation expectations. Given oil's significant weight in the U.S. CPI basket, its price decline offset some of the inflationary pressures caused by tariffs, pushing interest rate markets to price in up to five Fed rate cuts. Facing the trade-off between inflation and recession, the Fed appears more inclined to support growth. This signals to investors: short-term safe-haven assets may remain under pressure, while rate-cut expectations could benefit bonds and growth stocks.
2. Trump’s “Economic Revolution” and Wall Street’s Shock: The Ghost of Hoover
Trump has been unequivocal about the crisis. On April 5, he declared on Truth Social: “This is an economic revolution, and we will win.” He suggested the stock market crash was intentional—a strategic move to reshape global trade. Yet this bold gamble caught Wall Street off guard.
Treasury Secretary Besent, once seen as a bridge to the financial world, reportedly considered resigning on April 6 over what insiders called a "nonsensical tariff calculation." According to MSNBC, he merely presented scenario analyses at White House meetings, while actual decisions were driven by Peter Navarro, Howard Lutnick, and Jamieson Greer. With no access to influence, Wall Street watched helplessly as JPMorgan forecast U.S. GDP growth plunging to -0.3%, sounding a clear recession alarm.
History offers a cautionary tale in Herbert Hoover. In 1929, Hoover ignored opposition from business leaders and pushed forward the Smoot-Hawley Tariff Act, raising average tariffs to 59%. The result was a global trade war that deepened the Great Depression. Trump’s current all-in strategy bears resemblance—but so far, his team has achieved a weaker dollar (DXY down to 101), expectations for five rate cuts, and avoided actual recession (solid employment data on April 5). These outcomes align with his goals of lower rates and a weaker dollar. However, supply chain disruptions and plunging stock prices have left corporations reeling. Investors should beware: short-term policy gains may conceal long-term risks.
3. Societal Backlash and Pressure for Correction: Early Market Signals Emerge
Market turmoil quickly sparked public outrage. On April 6, the “Hands Off!” movement erupted across over 1,000 cities worldwide, protesting tariffs, federal layoffs, and Elon Musk’s DOGE division. At Washington’s National Mall, slogans like “Penguins Against Tariffs” and “Make My 401k Great Again” directly highlighted the impact on middle-class wealth. Tesla, targeted due to Musk’s alliance with Trump, saw showrooms attacked in both the U.S. and Europe, reflecting rising boycott sentiment.
The business community chose more direct action. On April 5, tech journalist Kara Swisher reported that a group of tech and finance leaders traveled to Mar-a-Lago to “discuss common sense” with Trump. These individuals, who once donated millions to his inauguration, now faced trillions in losses and viewed Musk as a potential lever for pressure. Meanwhile, rumors of Besent’s resignation and proposed legislation by Republican Senator Chuck Grassley to limit presidential tariff powers indicate growing internal and external pressure forcing Trump’s team to consider course correction. Texas Senator Ted Cruz warned: “Blanket tariffs will destroy jobs and devastate the economy.” The confidence of policymakers is now meeting the harsh test of reality.
4. Learning from History and Investment Decisions: Seek Safety or Buy the Dip?
Is this storm merely a technical correction or the prelude to a full-blown recession? The answer hinges on policy flexibility and the capacity for correction. The Federal Reserve still has about 400 basis points of room to cut rates (assuming the current rate is 4.8%). Interest savings from a 100-basis-point cut would far exceed fiscal tightening by Musk’s DOGE division. If economic data does not broadly deteriorate, the asset sell-off could present a buying opportunity. However, cuts to research funding (such as at NIH) and retaliatory global tariffs could erode America’s long-term competitiveness—the destructive trade war legacy of the Hoover era serves as a stark warning.
The political dimension is equally critical. The 2026 midterm elections represent a hidden vulnerability for Trump. Losing control of either chamber would cripple his legislative agenda, possibly explaining his urgency to deliver quick “wins.” For now, the pace of policy correction—such as outcomes from the Mar-a-Lago talks—will be the key indicator for the next phase. If Trump can balance short-term volatility with long-term objectives, his “economic revolution” might still succeed. But if he repeats Hoover’s mistakes, the consequences could be severe. Investors should consider the following strategies:
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Short term: Focus on bonds and defensive stocks amid rate-cut expectations; avoid highly leveraged assets.
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Medium term: If policy corrections succeed, undervalued U.S. equities and gold may rebound.
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Long term: Watch for escalation in trade wars; diversify into emerging markets to hedge risk.
Conclusion
Trump has used tariffs as a chess move to reshape the economic landscape, but market turbulence and social backlash have exposed the fragility of his strategy. His team has demonstrated the ability to manipulate markets, yet the ghost of Hoover reminds us that arrogance comes at a steep price. Your next investment move depends on how you weigh short-term chaos against long-term trends. Only by understanding this博弈 (strategic game) can one find opportunity amidst crisis.
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