2018 vs 2025: How Did Trade Wars Affect Markets?
Since U.S. President Trump imposed a universal import duty and reciprocal tariffs globally on April 2nd, stock markets around the world have experienced consecutive crashes. On Monday, all Asian and European stock markets experienced significant declines, and U.S. stock futures plummeted at the opening.
The tariff war launched during Trump's first term also caused the markets to significantly retreat. Based on historical trends, how much longer will U.S. stocks continue to fall?
A review of past market performance indicates that following the imposition of tariffs on China by the U.S. on March 22, 2018, during Trump's first term, stock prices showed a pattern of repeated bottoming. Subsequently, there was a rebound that lasted for several months.
However, Moomoo's tariff monitor shows that the scope and amount of the tariff in 2025 are far beyond the levels of 2018.
● The contexts of Trump's two trade wars differ significantly
In 2018, the global economy was still in the slow recovery phase following the international financial crisis. At that time, the trade wars launched by Trump, whether in terms of the targeted countries or the types of goods, were much lower than the levels in 2025.
By 2025, the global industrial and supply chains had undergone several years of adjustment and restructuring. With the experience from previous trade wars, Trump adopted a more aggressive approach in trade policy.
At the same time, he also hoped that tariff revenue could help bridge the fiscal gap. Considering his upcoming agenda to cut taxes, he needed increased tariff income to offset the impact of the tax cuts.
However, Trump also faced many obstacles, with significant inflationary pressure within the U.S. Any action to increase tariffs would exacerbate concerns about further inflation.
● How will trade wars impact the U.S. economy?
Referring to the impact on the U.S. economy after the start of the trade war, U.S. inflation continued to rise in the first half of 2018 until June, and then gradually declined in the second half of the year. Nonfarm payrolls saw a sharp drop in March 2018, but fluctuated and rebounded in the second half of the year.
● How should investors respond to a market crash?
The VIX index can be used to predict short-term bottoms and tops in the S&P 500 index. When the VIX index reaches extremely high levels, it suggests that the S&P 500 index may have bottomed out, potentially signaling a bullish trend.
Notably, last Friday, the $CBOE Volatility S&P 500 Index (.VIX.US)$ index broke above 45. To put this in perspective, since 2000, the VIX has only been above 45 for 1.74% of trading days.
Investors can also use specific option strategies to help reduce portfolio volatility, such as the protective put, which involves buying a put option for a stock that you already own, and the covered call, which involves holding a long position in a stock and simultaneously selling a call option on the same stock.
Moomoo provides a broad selection of option strategies. On the individual stock options page, investors can access analysis of option volatility and option pricing.
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Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Amidst the uncertain outlook of the trade war and escalating concerns about an economic recession, gold prices have repeatedly reached new highs this year, at one point surpassing $3,500 per ounce. This marks an almost 30% increase since the beginning of the year. For investors in U.S. equities, investing in gold mining stocks represents a significant opportunity to ride this wave. Amidst the uncertain outlook of the trade war and escalating concerns about an economic recession, gold prices have repeatedly reached new highs this year, at one point surpassing $3,500 per ounce. This marks an almost 30% increase since the beginning of the year. For investors in U.S. equities, investing in gold mining stocks represents a significant opportunity to ride this wave.
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🎙️ Discussion: 1. Has it $Gold Futures (AUG5) (GCmain.US)$ rebounded to $3,300? Will the short-term trend continue to rise? 2. What factors
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Tonyco : The two aren't as comparable, due to the severity of tariff and lack of any kind of stops (Republicans control all 3 branches)
102364285 Tonyco : so MARKET heavy heavy crash coming?? oh
skumaar42 : Hope the market bounce back after the tariff cold!
BelleWeather : Notice the VIX at open?
Cfour : If there was god he would eliminate orange man, worst president EVER!
Hamdog258 : Diabolical
MrRoy : markets will continue to drop until we come to some type of agreement.
SexytwistINV : The moves Trump did has effected the world
74723776 : that terrible