To The Moon

$ASML Holding NV(ASML)$ $SPDR S&P 500 ETF Trust(SPY)$

Trump’s Boldest Trade War Yet

Donald Trump has launched one of the most aggressive trade wars in U.S. history, imposing tariffs on Canada, Mexico, the entire European Union, and, most notably, China. This bold move has sent stock markets into turmoil as investors scramble to understand the broader implications of Trump’s escalating trade conflict.

America’s Growing Isolation

However, something unprecedented is happening—America is rapidly isolating itself on the international stage, severing ties even with its closest allies. Meanwhile, China is seizing the opportunity to consolidate power. Recent polls from YouGov indicate that U.S. favorability has declined across Western Europe following Trump’s reelection. As Europe grapples with Trump's shifting foreign policy, particularly his stance on Ukraine, China and Russia appear to be preparing for potential conflict.

China’s Bold Response

A striking tweet from the Chinese Embassy recently made waves, stating: "If war is what the U.S. wants—be it a trade war or any other type of war—we’re ready to fight until the end."

With over 16.4 million views, this message is significant not only because of its boldness but also because it breaks from China’s typically reserved diplomatic tone. It signals China's confidence in its ability to weather Trump’s renewed trade war.

China’s Economic Resilience

David Lee, a director at Beijing’s Tsinghua University, reinforces this notion, explaining that tariffs are no longer a major concern for China. Unlike in 2018, when Trump's initial trade war caught Chinese officials off guard, this time, China is well-prepared. Over the years, its economy has adapted and become resilient to U.S. trade restrictions.

Trump and Biden’s Common Ground on China

Interestingly, while Trump and Biden hold opposing political views, they share a similar strategy when it comes to containing China’s rise. Biden continued and even expanded Trump’s tariffs, reinforcing economic pressure on Beijing. But as the 2024 election unfolded, China had already adjusted its strategy for a potential second Trump presidency.

Trump’s Tariffs Against U.S. Allies

Yet, Trump's tariff war is not limited to China—it now extends to America's closest allies. Take, for example, Canada’s dairy industry, which Trump has threatened with a staggering 250% tariff. Despite Canada's status as the U.S.’s most trusted ally and largest trading partner, Trump is willing to exert economic pressure, further alienating the United States on the global stage.

The Future of Trump’s Trade War

As this trade war unfolds, the consequences of Trump's aggressive tariff strategy could reshape global alliances and shift economic power in unexpected ways.

Trump’s Promise vs. Economic Reality

On the campaign trail, Donald Trump assured American voters that imposing tariffs on China would bring manufacturing jobs back to the United States. However, the reality is that the U.S. economy—and everyday Americans—rely heavily on imports from China for essential goods.

A prime example is Walmart, America’s largest retailer, where an estimated 70-80% of products come from Chinese suppliers, leaving less than 20% for American-made goods. While Trump promotes tariffs as a strategy to revive U.S. manufacturing, many are realizing that this approach may not work as intended.

The Truth About American Manufacturing

A heated exchange between a CNBC anchor and U.S. Secretary of Commerce Howard Lutnick illustrates the skepticism surrounding Trump’s plan. Lutnick insists that tariffs will restore manufacturing in America, but the CNBC host literally laughs at the idea that products like t-shirts, sneakers, towels, and TVs will be made in the U.S. again.

The reason? Chinese manufacturing is simply too efficient, cost-effective, and fast. Labor costs in the U.S. are significantly higher, and production speeds are slower compared to China. Even with tariffs as high as 100%, American manufacturers struggle to compete.

Why Western Countries Still Rely on China

The issue extends beyond the U.S.—many European nations also face high labor costs. However, unlike Trump, most Western leaders are not imposing tariffs under the guise of reviving domestic manufacturing.

The reality is that China has embraced continuous reform, competition, and efficiency, allowing it to dominate global manufacturing. Tariffs may be a political bargaining tool, but the idea of "bringing back jobs" is largely rhetoric. Businesses sourcing products internationally know that tariffs of 10%, 20%, or even 45% won’t stop imports from China—they’ll simply raise costs for American consumers.

China’s New Semiconductor Supply Chain

If there’s any proof that China is unfazed by Trump’s trade war, it lies in the country’s semiconductor industry. Princeton researcher Kyle Chan explains that China is now building its entire semiconductor supply chain domestically—something no country has attempted before.

Before Trump’s initial trade war in 2018, China had no plans to develop a fully independent chip-making industry. But after facing U.S. restrictions, China adapted, just as it did with its space program. When NASA was banned from working with Chinese astronauts, China responded by building its own space station, successfully completed in 2022.

If China succeeds in achieving semiconductor self-sufficiency, it would be one of the most significant technological accomplishments in modern history. Today, no single country produces advanced microchips alone—technology from the U.S., Germany, the Netherlands, Japan, Korea, Taiwan, and China is required. The semiconductor industry is a testament to global cooperation, something Trump’s trade policies threaten to disrupt.

Trump’s Approval Rating Drops Amid Trade War

Trump’s shift toward economic protectionism is not sitting well with the American public. Recent polling shows that only 37% of Americans approve of his handling of foreign policy, while 50% disapprove—giving him a net approval rating of -33 points.

As I mentioned earlier, China is patiently watching as the U.S. isolates itself on the global stage. The consequences of Trump’s trade war extend far beyond tariffs—they could reshape the world economy in ways few anticipate.

Why Europe Is Moving Closer to China

Tensions Between Trump and Europe Benefit China

A recent CNBC Money Report highlights an unexpected consequence of rising tensions between the U.S. and Europe: China stands to benefit. Relations between the U.S. and its European allies hit a new low following a disastrous Oval Office meeting between Trump’s Vice President, J.D. Vance, and Ukrainian President Volodymyr Zelensky. What was supposed to be a critical minerals deal ended in a public shouting match.

To make matters worse, Trump has repeatedly threatened tariffs on EU imports and even claimed that the European Union was formed to “screw the United States.” As a result, European trust in the U.S. is fading, paving the way for one of the most significant geopolitical shifts in modern history.

Europe’s Growing Desire for Independence

For decades, Europe has aligned itself with U.S. trade policies designed to protect Western technological innovation and economic interests. However, Trump’s confrontational stance—his threats to leave NATO, impose sanctions, and disrupt trade relations—is forcing European leaders to reconsider their dependence on the U.S.

A prime example is Dutch semiconductor giant ASML, which has faced restrictions on selling advanced chip-making equipment due to U.S.-led export controls. Much of Europe’s past cooperation with Washington’s China policies stemmed from reliance on U.S. military protection. But if Trump no longer views Europe as a key ally, European nations may find themselves seeking true independence from U.S. influence for the first time in over 50 years.

How Chinese EVs Could Transform Europe’s Auto Industry

One immediate area where European leaders may shift policy is in the auto industry. Currently, the EU imposes tariffs on Chinese electric vehicles (EVs) to protect domestic manufacturers. However, as European automakers struggle with rising costs, technological transitions, and growing competition from China, a policy shift may be inevitable.

By working with China, Europe could secure critical EV components, accelerate the transition to electric cars, and strengthen its sustainability efforts. Facing the looming threat of U.S. tariffs, European industries must now look for alternative markets—and China presents an increasingly attractive option.

Spain’s Strategic Partnership with China

Some European countries are already taking steps in this direction. According to The New York Times, Spain has embraced Chinese trade partnerships while other EU nations remain cautious. The port of Barcelona recently approved plans for a new terminal with direct railway access to handle Chinese EV exports to Europe.

Additionally, the Spanish government signed a major deal with Chinese wind turbine company Envision Energy, which is investing $1 billion in a green hydrogen industrial park in Spain. This landmark agreement has sparked interest across the continent, with more European countries now exploring deeper economic ties with China.

A Rapid Geopolitical Shift in Europe

To accommodate this growing interest, the European Parliament has lifted restrictions on lawmakers meeting with Chinese officials, enabling more direct trade negotiations. These moves reflect a dramatic transformation in global trade dynamics—one that few predicted just months ago.

The first 60 days of Trump’s second term have already triggered massive shifts in international relations. As Europe reevaluates its economic and political alliances, the fallout from Trump’s policies is reshaping global markets in ways that will have lasting consequences.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

@Daily_Discussion @TigerPM @TigerObserver @Tiger_comments @TigerClub