On April 2, 2025, Anthony Pompliano – CEO of Professional Management – shared his views on President Trump's tariff strategy, emphasizing that a 5-10% tariff is ideal, while tariffs over 30% should only be used for negotiation. This view, along with the context of the trade war between the USA and China, could have a strong impact on global financial markets. Let’s analyze in detail.
Pompliano's View: Smart Tariffs But Need Adjustments
Pompliano assesses the tariff strategy of #USA as 'smart' in the current context, when the USA is in a strong position with the world's largest economy (GDP of $27 trillion, according to World Bank). He suggests:
A general tariff of 5-10% on all imports, but exempt tariffs on USA products they want to encourage (such as high-tech components from Japan).
Tariffs over 30% are unsustainable, should only be used as a negotiation lever and lowered in a few weeks.
Negotiating over 100 trade agreements at once is impractical, thus a new trade organization with common rules is needed.
The battle is primarily between the USA and China – two 'giants' that neither side is willing to yield (USA exports $150 billion to China, China exports $450 billion to the USA, according to USTR).
#Pompliano also noted that the stock market will recover if the Fed cuts interest rates 1-2 times (expected 0.25% in 05/2025, according to CME FedWatch) and there are positive announcements from Trump. He emphasized that Bitcoin will be a notable asset if countries devalue their currencies in the trade war.
Impact on the Financial Market
Stock Market: Optimistic Sentiment If Tariffs Are Reduced
If Trump imposes a 5-10% tariff as Pompliano suggested, the stock market could recover strongly. Low tariffs will reduce import costs, improving profit margins for multinational companies like Apple (importing 60% of components from China, according to Nikkei) and Walmart (70% of goods from China). The S&P 500, which rose 8% in Q1/2025, could increase another 5-7% if the Fed cuts interest rates and Trump makes positive announcements (according to Goldman Sachs).However, if tariffs exceed 30% and are prolonged, the market will face significant pressure. Rising production costs could push inflation up to 1.5% (according to Goldman Sachs), reducing corporate profits and causing pessimistic sentiment. The DAX index (Germany) has fallen 2% due to concerns about USA tariffs on European cars (according to EU Trade Commission).
Forex Market: USD Experiences High Volatility
Tariffs of 5-10% could weaken the USD due to increased free trade flows, reducing domestic USD demand. The euro has risen 4% against the USD in 2025 (according to ECB), and this trend could continue if the USA and other countries reach an agreement. Conversely, tariffs over 30% will increase the USD value due to reduced imports, putting pressure on other currencies such as the yuan (China fell 3% against USD, according to PBOC).If the Fed cuts interest rates, the USD will weaken further, creating opportunities for inflation-hedging assets like gold ($3,171/oz, up 19% Q1/2025) and Bitcoin ($84,900, down 12% but with potential for increase).
Crypto Market: Bitcoin Benefits from Currency Devaluation
Pompliano emphasized that Bitcoin is a 'notable asset' if countries devalue their currencies in the trade war. If China devalues the yuan to boost exports (expected to fall by 5%, according to UBS), investors will turn to Bitcoin as 'digital gold'. Bitcoin could rise to $100,000 if stagflation occurs (according to Grayscale), especially when the USD weakens and inflation rises (estimated at 1.5% due to tariffs).However, the crypto market remains highly volatile (market cap fell 11.65% to $2.88 trillion in Q1/2025). Ethereum dropped 45% ($1,830), indicating pessimistic sentiment. Bitcoin needs more momentum from positive announcements to break through.
Commodity Market: Price Pressure
Tariffs of 5-10% will reduce shipping and production costs, pulling commodity prices down. Crude oil fell 2% to $70/barrel (according to WTI), and industrial metals like copper fell 1.5% (according to LME). This benefits manufacturing companies but harms exporting countries like Brazil and Russia (the Bloomberg commodity index fell 3% in Q1/2025).
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Long-Term Impact and Risks
In the long term, if tariffs stabilize at 5-10%, the USA could achieve Trump's goals: increasing domestic production (estimated to create 500,000 jobs, according to USTR) and reducing the trade deficit (currently $900 billion). A new trade organization with common rules will promote global trade (increasing by 2.5%, according to WTO), helping global stocks recover (the MSCI World Index could increase by 10% in 12 months).
However, the risks remain high:
USA-China tensions: Both countries are not yielding, and high tariffs could escalate the trade war (#China threatens a 25% tariff on USA agricultural products, according to Xinhua).
Rapid volatility: Pompliano warns that the situation could change quickly, especially if Trump imposes tariffs over 30% (which could reduce USA GDP by 0.8%, according to Goldman Sachs).
Market sentiment: If there are no positive announcements, pessimistic sentiment will continue, affecting risk assets such as stocks and crypto.
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Conclusion: Opportunities and Challenges Go Hand in Hand
Pompliano's view on 5-10% tariffs brings hope to the financial market: stocks could recover, the USD weakens, and Bitcoin benefits if currencies are devalued. However, the USA-China trade war and the risk of high tariffs (over 30%) is a significant 'headwind'. Investors need to closely monitor Trump's moves and China's reactions to adjust strategies. If tariffs reach the ideal level, it will be a 'major victory' for Trump's policy, opening a new growth phase for the financial market.
Risk warning: The financial market is greatly affected by tariff policies and macroeconomic instability. Please consider carefully before investing.