To The Moon

$SPDR S&P 500 ETF Trust(SPY)$ $NASDAQ(.IXIC)$

Alright, Tiger, we’re heading straight into the eye of the storm. For over three years, we’ve known the U.S. economy was in serious trouble. Inflation remains high, and interest rates are still at extreme levels.

In 2024, Biden attempted to mask the underlying issues through excessive deficit spending, borrowing over $1.8 trillion—equivalent to 6.4% of the total U.S. GDP—to keep the economy afloat. This flood of money artificially fueled consumption, distorted asset prices, and created a false sense of stability. But the time bomb was already ticking, and now it’s detonating under Trump’s administration.

Despite all that spending, GDP growth for 2024 came in at just 2.8%, a glaring warning sign that the system is fundamentally broken. For every dollar of GDP growth, the U.S. spent more than $2—a clear indication of massive inefficiency and waste.

Now, Trump has decided to escalate the crisis with his global tariff war. Starting April 2nd, he’s imposing a 25% tariff on imports from Canada and Mexico, stating that if they want to avoid tariffs, they need to relocate production to the U.S. The stock market reacted immediately, tumbling in real time as Trump made the announcement.

As we’ve warned before, Trump is determined to punish foreign economies, believing it’s the only way to restore American industries. However, tariffs follow a "beggar-thy-neighbor" approach—crippling other economies to boost your own. Now, it’s official: a 25% duty will hit Canadian and Mexican imports, while tariffs on Chinese goods will increase from 10% to 20%. Altogether, these policies impact $1.5 trillion worth of U.S. imports annually.

The consequences will be severe. Global supply chains will be disrupted, and many exporters worldwide could be forced out of business. By raising tariffs, Trump is essentially weaponizing America’s consumer market, forcing countries like Mexico to deindustrialize and relocate production to the U.S. But he’s overlooked one crucial factor—other nations will retaliate.

The era of U.S. unipolar dominance is ending, and the shift to a multipolar world is inevitable, no matter how hard Trump tries to resist it.

The World Retaliates Back US Empire

China and Canada have officially begun their trade retaliation. Here’s how Canada is hitting back: a 25% tariff on $20 billion worth of U.S. exports. In just three weeks, Canada plans to impose additional tariffs on another $125 billion of American goods. If Trump refuses to back down from his trade war, things could get ugly fast.

Canada has the ability to escalate tariffs on every single U.S. import, impacting $350 billion worth of American exports—its largest market. Trump is playing with fire. By imposing tariffs on imports, he’s directly fueling inflation at home. U.S. consumers are already in crisis mode, relying heavily on credit cards to sustain their spending. Now, with global retaliation underway, American exports could come to a grinding halt.

The reality is that U.S. industries are high-cost producers, making them especially vulnerable. Canada’s 25% counter-tariffs alone could wipe out profit margins, particularly if American exporters are forced to absorb the extra costs. On top of that, boycotts against U.S. goods have already begun. This retaliation could cause U.S. exports to Canada to plummet—mining exports could shrink by nearly 100%, motor vehicle exports could collapse by 55%, and manufacturing and electronic equipment sales could plunge by at least 67%.

This isn't just a setback; it's economic devastation on both sides. It's mutually assured economic destruction. But Trump doesn’t seem to care—he's determined to fast-track America’s industrial revival, even if it means wrecking economies along the way. However, his gamble might not pay off.

The U.S. economy is already showing signs of collapse. In the past, the government's go-to strategy for managing crises was to borrow massive sums and ramp up spending, effectively running the economy hot with higher fiscal deficits. But that option is no longer viable—foreign nations are losing interest in buying U.S. bonds. They’re not willing to finance their own containment.

The latest estimates from the Atlanta Fed paint an even bleaker picture. Just days ago, U.S. GDP projections stood at -1.5%, but they’ve now plunged further to -2.8%. Trump is running out of options. He can't afford to increase the deficit, and in a desperate move, he's slashing federal jobs at an alarming rate. With borrowing costs already high, any further increases would squeeze American consumers even more.

The U.S. economy is now in uncharted territory.

US Market Bloodbath

The U.S. now faces a choice between a controlled implosion or a chaotic collapse—either way, the outcome will be painful. Jobs will be lost, and the financial markets are already feeling the devastation. If you’ve been watching, you’ve seen the bloodbath—within hours, the S&P lost over $1.5 trillion in market value. That was just a few days ago; today, total losses likely exceed $4 trillion.

Investors and the global economy are losing confidence in the U.S. If Trump continues hammering the world with tariffs, how can this possibly be good for corporate earnings? U.S. consumers will face higher prices, leading to a collapse in domestic spending. Meanwhile, countries like Mexico and Canada, heavily dependent on U.S. trade, will also suffer severe economic downturns. Their chances of entering a recession are extremely high.

Now, the U.S. is in a full-scale trade war with its largest trading partners. If all sides retaliate with equal tariffs, Canada’s GDP could shrink by 3%, while Mexico’s could contract by 3.1%. Even if they choose not to retaliate, their economies would still shrink by at least 1%, which alone could push them into a recession. And when an economy contracts, the biggest casualty is job growth—meaning mass unemployment is inevitable.

So how is this good for Trump's economy? He’ll be left with millions of angry people, struggling financially, who will have no desire—or ability—to spend on American goods. Instead, they’ll either buy locally, turn to other countries, or cut back on spending altogether.

This is where Trump has made a critical miscalculation. He truly believes the world will simply back down. But his biggest mistake of all? Underestimating China.

To be fair, tariffs are no longer China’s primary concern. Even if you listed the top three economic challenges facing China, tariffs wouldn’t make the cut. The Chinese economy has long prepared for extreme tariff hikes—40%, even 60%. Now, with Trump imposing only a 10% increase, it’s far below what was anticipated. While indirect tariffs on Chinese goods through Mexico, Canada, and Europe exist, the overall impact remains smaller than in 2018.

China’s economy is highly resilient. In this economic conflict, they have ample room to launch massive stimulus measures. Their bond yields are significantly lower than those in the U.S., and inflation remains under control. Unlike the U.S., China is fully prepared for this fight.

China Strikes Back Begin

This is why China has no hesitation in striking back. Beijing has officially retaliated, and the impact is ripping through U.S. markets. A 15% tariff has been imposed on key U.S. agricultural exports, including chicken, wheat, corn, and cotton. Meanwhile, soybeans, beef, fruits, and dairy products are now subject to a 10% tariff.

This is a severe blow to U.S. farmers, who already operate on razor-thin margins. China, however, is not reliant on American food imports—they can easily source these products from BRICS nations like Russia and Brazil. Beijing won’t face food shortages, but U.S. farmers will suffer immensely. And beyond that, China has the capacity to produce more of its own food at a much lower cost than the U.S.

Trump has walked into a trap, and the results won’t be in his favor. China has targeted at least 10 categories of American agricultural exports, totaling $22 billion. But these tariffs aren’t just a simple tax increase—they're a directive from a command economy. Beijing isn’t just raising costs; they’re strategically cutting off U.S. farm exports altogether.

Reading between the lines of China’s official statements, the message is clear: they refuse to be bullied by Trump’s tariffs and are now backing that stance with real economic countermeasures.

China is facing tariffs like no other country, as the U.S. attempts to turn North America into a trade fortress against Chinese goods. In fact, there have even been discussions about Mexico matching U.S. tariffs on China, with some suggesting Canada should do the same. The idea is to create a “Fortress North America” to block Chinese imports from flooding the market.

This is an existential threat to China’s economy, and Beijing knows it. Trump is attempting to weaponize the entire Western Hemisphere against Chinese trade, leaving China no choice but to retaliate aggressively. If they don’t, they risk seeing their trade surplus with the U.S. vanish entirely.

Meanwhile, U.S. markets are collapsing to new lows in 2025. Whatever gains were made since Trump took office have been wiped out. If you were heavily invested in U.S. stocks, you’re likely seeing red across the board.

The numbers tell the story: U.S. tariffs on China now impact over $520 billion worth of Chinese goods. In contrast, China’s retaliatory tariffs have only hit about $40 billion worth of U.S. exports—meaning Beijing still has plenty of room to escalate further. Last year, China imported $160 billion in American goods and services, much of which can easily be replaced by domestic production.

China isn't out of moves. This trade war is far from over.

Massive Risk For Bigger Stock Collapse

There is a fundamental difference between China’s retaliation and Trump’s trade war. When the U.S. imposes tariffs on China, prices rise for American consumers because U.S. supply chains are still fractured. China, on the other hand, can easily source alternatives from global markets or simply manufacture the goods domestically. They can rely on their own homegrown industries instead of importing from the U.S.

This is why Trump’s trade war is ultimately self-destructive—he’s attacking America’s closest trade partners while empowering China, and in the process, he’s driving the U.S. economy off a cliff. Even investors are fighting back, dumping U.S. stocks. The S&P has now erased all post-election gains, with losses exceeding $3 trillion. The biggest casualties? The overpriced "Magnificent Seven" tech stocks.

How much further this collapse goes depends entirely on Donald Trump. Right now, he’s acting as a one-man government. If he reverses course on tariffs, the stock market might recover. But if he doubles down, it will only invite even harsher retaliation.

Take Canada, for example. They’re preparing extreme countermeasures. Boycotts are intensifying as part of a broader strategy to push back against Trump’s trade war. Nova Scotia has announced plans to remove all U.S.-made alcohol from store shelves. Additionally, U.S. companies will be banned from bidding on provincial contracts, and existing deals will be canceled.

In other words, the world is starting to freeze the U.S. out. This trade war is spiraling out of control, with no real winners—except the possibility that the U.S. could suffer the most.

One thing needs to be made clear: the U.S. economy is not exceptional, nor is it immune to global retaliation. The chaos isn’t over yet.

What do you think? How much further will U.S. stocks fall? Will Trump back down, or will he continue escalating the trade war? Let me know in the comments below.

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.

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