The US tariff policy has triggered a chain of turbulence in the global financial market, and expectations of economic globalization have been severely hit

With the United States comprehensively raising import tariffs and frequently adjusting related policies, global trade tensions continue to escalate, and market uncertainty has significantly increased. In the short term, the sudden change in US trade policy is rapidly disrupting the pace of global capital markets, leading to significant fluctuations in the prices of major financial assets; In the long run, the non market-oriented industrial chain restructuring triggered by tariffs will have a profound impact on the global financial system.

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1、 Short term impact: Global markets experience severe volatility, with risk premiums rapidly rising

The new round of tariff adjustments in the United States has significantly raised expectations of geopolitical risks, posing a significant impact on the sustainability of globalization and triggering a surge in global market risk aversion.

The fear index VIX surged to 52.3% on April 8th, reflecting the market's high sensitivity to sudden geopolitical conflicts and economic policy uncertainty. At the same time, the US financial market experienced a "triple correction" in the stock market, US dollar, and bond markets. According to WIND data, from April 2nd to 8th, the Dow Jones, Nasdaq, and S&P 500 indices fell 10.8%, 13.3%, and 13.5% respectively; The US dollar index fell 5.1% from April 2nd to 21st, briefly falling below the 98 level; In the US bond market, the yield of 10-year treasury bond bonds rose 20 basis points to nearly 4.5%.

The commodity market has also been affected. London gold and COMEX gold prices fell by 4.9% and 6.0% respectively during the same period; In terms of the crude oil market, Brent and WTI crude oil prices fell by 16.0% and 17.7% respectively.

The severe fluctuations in the US financial market quickly spread globally. From April 2nd to 8th, both the German DAX index and the Eurozone STOXX50 index fell by nearly 10%; In the Asian market, the Nikkei 225 and South Korean Composite Index fell by 7.6% and 6.8% respectively; The Shanghai Composite Index and Hang Seng Index fell by 6.1% and 13.3% respectively.

In addition, the weakening of the US dollar has led to rapid appreciation of other major currencies. Throughout April, the US dollar index fell by about 4.7%, while the euro, yen, and pound appreciated by 5.1%, 4.8%, and 3.6% respectively against the US dollar, causing severe fluctuations in the foreign exchange market and disrupting the exchange rate expectations of businesses and investors.

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2、 Long term risk: the accumulation of risks in the reshaping of the global supply chain and the reassessment of market patterns

The current round of tariff policies reveals the United States' continued unilateralism in foreign trade, and the global rule-based free trade system is facing serious disruptions. The global division of labor model centered on cost efficiency is facing reshaping, and the risks of geo economic fragmentation and market fragmentation are significantly increasing. The resilience and potential of global economic growth are severely weakened.

The tariff mechanism raises the cost of imported goods through price transmission, causing short-term pressure on trade transfer and inventory adjustment. Enterprises are forced to stockpile goods in advance or seek alternative suppliers, leading to rising operating costs and further transmitting them to consumers, pushing up inflation. In the medium to long term, production bases may relocate, and global trade flows and industrial chain structures will be deeply reshaped.

In addition, the combination of technological restrictions and tariffs amplifies supply chain risks, affects cross-border capital flows and investment confidence, weakens the efficiency and resilience of global industrial chains, and comprehensively raises global production and supply chain costs.

The consumer side will also bear the pressure of rising costs, and the price transfer effect will push up the prices of end products, exacerbating inflation expectations. High inflation and high costs will compress corporate profits and cash flow, suppress global trade and investment expansion, further suppress global economic growth momentum, and trigger structural unemployment problems.

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3、 Financial asset revaluation and increased capital flow risk

The expectation of high inflation will raise the inflation premium in the bond market, while the uncertainty brought by tariffs will increase risk and term premium, reshape the yield curve of the global bond market, and promote asset price revaluation. The deterioration of corporate profit expectations will affect stock market performance, and global risk assets will face valuation pressure.

At the capital market level, short-term capital flows may become disorderly, and the foreign exchange market faces high-frequency volatility risks. In addition, due to the rising uncertainty of trade and investment, the demand for risk aversion in the market surged, which led to the asset allocation tilting to gold, treasury bond and other risk aversion assets. Although the price of safe haven assets may rise in the short term, if the price foam bursts, it will also induce new systemic financial risks.

The continuous lack of funding support for risk assets may lead to a decline in innovation activities and employment absorption capacity, long-term weakening of the potential output level of the global economy, and the formation of a "growth slowdown trap".

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Conclusion: Global policy response to challenges is arduous

The US tariff policy not only strengthens the downward pressure on the global economy, but also poses new challenges to the global macro policy framework. Countries need to strike a balance between mitigating short-term market shocks and stabilizing long-term supply chain restructuring.

Currently, the global financial market is experiencing a profound shock caused by policy uncertainty, and the development path of economic globalization is facing a re examination. Its negative impact may continue for many years.