To The Moon

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The Meltdown Has Begun

Alright everyone, the meltdown is officially underway.

Just a week ago, we warned everyone to brace for impact. We said it was time to operate under the assumption that Donald Trump is completely serious—and now, we’re seeing it play out. As of today, U.S. markets have entered correction territory. The S&P 500 is down over 10%, and there’s a strong chance this is just the beginning.

Trump is pressing forward with his tariff war and has just delivered a major shock to the global economy. While we saw this coming and have discussed the scale at length, it’s now clear that the U.S.’s reciprocal tariffs will hit all countries—not just China, Canada, or Mexico. And they won’t be limited to steel, semiconductors, or pharmaceuticals. Virtually everything is on the table.

The global economy is in crisis mode. We’re staring down a scenario where global supply chains are about to fracture. Gold is surging past $3,100 an ounce, signaling just how unprecedented and volatile the current situation is.

Tariffs will push prices higher, and because this trade shock is global in scope, there are very few safe havens left. Stock prices rely on earnings, and if global trade starts to freeze, corporate revenues will follow. At the same time, purchasing power is being eroded.

What gold is really telling us is that the risk of stagflation—a toxic mix of stagnating growth and rising prices—is increasing fast. Growth is slowing, potentially grinding to a halt. Yet, consumer prices are heating up thanks to sweeping trade barriers.

Now, while we could eventually see prices collapse, that wouldn't be due to improved supply. It would be the result of a global recession where demand evaporates—people simply too broke to buy anything.

There was early hope that Trump would focus on the DIR-15—countries seen as the biggest tariff offenders—but that appears to be off the table. Instead, his reciprocal tariff strategy is targeting all countries, regardless of whether they run a trade deficit or surplus with the U.S.

Trump’s goal is clear: force the world to lower tariffs on U.S. goods. He’s going full throttle, and we have to operate under the assumption that this isn’t a bluff. The U.S. trade deficit is massive, and Trump believes it needs shock therapy to fix. His “Art of the Deal” playbook is in full effect—strike hard first, weaken your counterparts, and then dictate terms.

Let’s dig into the global picture. Many countries—those in blue, pink, and yellow on the tariff map—have significant duties on U.S. imports. Canada, China, and Mexico have already been hit. Next in line are likely Brazil, Russia, the EU, India, and much of Southeast Asia.

Many of these nations are still emerging economies that rely on exporting to the U.S.—especially for U.S. dollars, which remain the bedrock of global trade. If Trump follows through, we may face another round of currency crises, similar to what we saw in 2022.

Now, if we examine trade-weighted average tariffs—which measure the real effective tariff rates across all imports—countries like South Korea, India, Vietnam, and Brazil are in the danger zone. Korea's average is over 8%, India’s is a staggering 12%. These nations are now top targets for reciprocal tariffs.

This is all part of a broader U.S. push to strengthen domestic production across sectors, which only works if there are strong global outlets for American-made goods. U.S. consumers alone can’t absorb that output. Dropping the trade deficit is now mission-critical for the administration.

Trump’s justification is straightforward: keep money and jobs in America. That’s why another key target group will be countries with a major trade surplus with the U.S. Removing China, Mexico, and Canada from the list (already addressed), we’re left with Taiwan, Germany, Ireland, Vietnam, South Korea, and India—all of which are likely next in line.

From April 2nd, the landscape for global trade is set to change dramatically—and these countries may be among the hardest hit.

US Desperate Gamble

Not a Show of Strength—But a Desperate Move

Let’s be clear: this isn’t a display of strength. It’s a desperate attempt to corner the global economy and steer the U.S. away from a looming economic iceberg that’s now just 100 meters away. But even with this aggressive maneuver, the U.S. economy is still going to take a serious hit—and it won’t be pretty.

In fact, many forecasts now show the U.S. will be the biggest casualty of this global tariff escalation.

According to the IMF, global GDP could fall by 0.6% through 2026 as a direct result of these trade disruptions. China, surprisingly, may be the least impacted among major economies. But the U.S. is expected to take the brunt of the damage—with some projections estimating over a 1% hit to GDP once tariffs and trade uncertainty are factored in.

Markets understand the implications. Under a prolonged trade war regime, the U.S. economy simply cannot grow at the same pace it once did. Other nations will retaliate, pulling back from buying American goods. The pressure on growth will be enormous—and that’s before accounting for second-order effects.

This is why the markets sold off hard yesterday.

By rolling out reciprocal tariffs on nearly every trading partner, Trump is effectively raising the average tariff rate in the U.S.—a move that directly translates into higher consumer prices. According to Goldman Sachs, the average U.S. tariff rate could spike by 15 percentage points in 2025. That’s three times higher than where forecasts stood at the beginning of the year, when tariffs averaged just 3%.

If those increases hit shelves, American consumers could see prices jump 18% or more—something that registers directly as inflation.

And inflation, paired with slowing growth, is a toxic combination. That's why global banks are raising their recession odds. Goldman now puts the risk of a U.S. recession at 35%, while JPMorgan estimates a 40% chance of economic contraction. This is exactly why the stock market is in freefall.

We’re seeing a scramble as investors rush to reprice U.S. equities. Earnings multiples are getting slashed because the tariff war has escalated far beyond what many were expecting. But if you’ve been following this channel, you know we've been warning for a while: when it comes to Trump and trade, you have to take him very seriously. The reality is simple—America is running out of options.

The World Is Not Ready

Markets are still massively underestimating Trump.

Take a look at this chart—it shows the latest global expectations for U.S. tariffs. As a reference, Trump’s campaign pledge includes a 60% tariff on Chinese goods and a universal 10% tariff across the board. Yet, even by March 2025, expectations remain under 6%. That tells us one thing: the world still doesn’t believe Trump will go full throttle with his trade war.

But how bad things get will depend entirely on how far Trump takes it.

If he ramps up and starts targeting more countries, layering in sector-specific tariffs on top of blanket ones, we’re looking at a shock that could shake the global economy to its core.

Over the past two months, Trump’s agenda has become increasingly clear—he wants to reindustrialize America. Whether that works in the long run is still up for debate. But to fast-track the plan, he's going nuclear with a global tariff war—meant to intimidate and corner global exporters into submission. And it’s working.

Just look at the victory lap Trump took today on TRUTH Social. Global firms are pouring billions into the U.S. to sidestep tariffs:

• TSMC: $100 billion

• Apple: $500 billion in commitments

• CMA CGM: $20 billion + 10,000 U.S. jobs

• Honda, Nissan, Hyundai: Shifting production to the U.S.

But is this really a win? Not exactly.

All these goods are going to be more expensive. At a time when American consumers are financially stretched, who’s going to absorb those higher costs? Will people really pay more for cars or the next iPhone? Or will they just walk away?

Meanwhile, U.S. stocks are massively overvalued—and now they’re crashing. The S&P 500 is already down more than 10% in Q1 alone. That’s the worst first quarter since 1988—worse than the 2008 mortgage meltdown or even the 2020 pandemic crash.

And remember what happened after those crashes? We still had months of further declines. If history repeats, we could be in for another leg down—especially if Trump doubles down instead of reversing course.

As for where the market could bottom? There are only three major support levels left for the S&P: 5,400, 5,200, and the psychological 5,000 mark.

What makes this timing worse is the massive wave of options expirations. The longer equities stay down, the more banks and market makers are forced to dump shares to cover positions. That could trigger a cascading effect—breaking support levels one after another.

And if we get a true capitulation event? That could easily wipe another 10% off the markets—and at that point, it’s anyone’s guess how low we go.

In other words, we’re already sitting on a powder keg.

The Reverse Wealth Effect Has Begun

Here’s what no one is talking about: U.S. households today hold over 170% of their disposable income in equities. That’s a staggering amount of wealth tied to a single asset class—and it’s now falling week after week.

As stock prices collapse, people feel poorer—and they spend less.

Right now, it’s the top 10% of earners propping up the U.S. consumer economy. The middle class and working class are already being squeezed. But the wealthy—the group that owns most of the equities—are the ones taking the hit. As their portfolios shrink, their spending shrinks too. That’s how you get a reverse wealth effect spiraling into a real economic slowdown.

So on one side, tariffs are jacking up prices by 20%. On the other, stock portfolios are bleeding value. That’s a one-two punch the American economy isn’t prepared for. It used to be the economy that moved the markets. But now, it’s the markets driving the economy. This is Twilight Zone economics.

And before anyone says “Trump will save the day”—consider this final point:

Scott Bessent, economic advisor, made it very clear. The stock market isn’t a priority for the Trump White House:

"We're not concerned about a little bit of volatility over 3 weeks… what we care about is the long-term gains for the American people."

But here’s the reality: 62% of Americans own stocks. This isn't just volatility—it’s a massive unwind of household wealth. So buckle up. We’re already deep in the danger zone, and this trade war is only just getting started. Things could get ballistic very quickly.

Let us know in the comments: How far do you think the markets will fall? Will Trump go all-in on his tariff war?

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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