Global Financial Market Turbulence: Reciprocal Tariff Policies Trigger Chain Reactions

Recently, the global financial markets have experienced severe fluctuations. The three major U.S. stock indices have continued to decline, and European and Asian stock markets have also seen significant losses. The commodity market has not been spared either, with both crude oil and gold prices dropping. The cryptocurrency market has also struggled to maintain its previous resilience, with Bitcoin falling over 10% within two days, and Ethereum plummeting by 20%. The entire global financial market presents a "green" landscape.

The source of this market turmoil can be traced back to the "reciprocal tariffs" executive order recently signed by the U.S. President. This executive order announces a 10% "minimum baseline tariff" on trade partners and imposes higher tariffs on certain trading partners. This move has sparked trade frictions globally, with multiple countries and regions taking countermeasures.

After the implementation of the equivalent tariff policy, global financial markets experienced an unprecedented crash. U.S. stock futures continued last week's sharp decline, with Nasdaq index futures down over 5% and S&P 500 index futures down over 4%. European stock index futures were similarly hard hit, with significant drops in the European STOXX50 index futures and DAX index futures. The Asian markets were no exception, as the Japanese and South Korean stock markets collapsed again, and the Hong Kong Hang Seng Index recorded its largest single-day drop since 1997.

The cryptocurrency market also failed to remain unscathed. Bitcoin's price once fell below $75,000, altcoins collapsed across the board, Ethereum dropped below $1,500, and Solana fell to a low of $100. According to data from the platform, a total of 487,700 people were liquidated that day, with a liquidation amount exceeding $1.632 billion.

In the face of such a severe market situation, concerns about a global economic recession have once again become the focus. Several economists and business leaders have stated that the U.S. economy may already be in a serious recession. A survey shows that 69% of business executives expect an economic recession in the U.S., with more than half believing that the recession will arrive this year.

However, the U.S. government does not seem to have changed its position due to market reactions. Government officials revealed that over 50 economies have engaged with the U.S. regarding tariff policies, but the U.S. President still stated that "there will be no suspension of tariffs."

The purpose of the reciprocal tariff policy mainly includes three aspects: reversing trade imbalances, increasing fiscal revenue, and serving as a tool for diplomatic negotiations. However, from the current situation, this policy has already caused a huge impact on the global economy.

The market is generally concerned about the impact of the reciprocal tariff policy on the US economy, especially in terms of inflation and economic growth. Research institutions predict that the new tariff policy may raise the price level in the US by 1-2.5%. At the same time, several organizations have lowered their GDP growth forecasts for the US in 2025 and increased the probability of an economic recession.

Faced with market pressure, the Federal Reserve may take action. Currently, the market expects a rate cut of 125 basis points by the end of the year. The U.S. President has also publicly called for the Federal Reserve to lower interest rates.

Despite the severe market fluctuations, several countries have begun to take measures to stabilize the market. Some national teams have entered the market to increase their holdings in order to bolster market confidence. This suggests that yesterday's sharp decline may have been more driven by panic emotions rather than a true recession.

There are significant differences in market views regarding the future direction. Some analysts believe there is still room for selling, while others think the market may rebound. Technical traders generally tend to be bearish, expecting that the price of Bitcoin may drop further.

Currently, the global market remains in a wait-and-see state. The Federal Reserve is about to release the minutes from the March monetary policy meeting, which may provide more clues for the market. With uncertainties surrounding trade negotiations and economic policies, there are still many variables affecting the market direction. Investors need to closely monitor policy trends and economic data to make informed investment decisions.