What's going on with Trump's' reciprocal tariffs' policy? Recently, Trump's waving of the tariff "big stick" has caused market turbulence. Today, let's talk about this highly anticipated "equivalent tariff". Simply put, 'equivalent tariffs' refer to the amount of tariffs imposed by the other party on our side, and how much we will retaliate. The economics and finance fields already have a complex and precise calculation method that uses efficiency transfer parameters and elasticity coefficients to differentiate the tariff situations of different countries. But the Trump team took a different approach, using the 2024 import and export data of the United States, setting the price elasticity of import demand ε to 4, the elasticity coefficient of import prices to tariffs φ to 0.25, and calculating the differentiation point as 1 (4 × 0.25). This approach surprised experts and became a laughing stock among netizens. There are also claims that this tariff is calculated based on trade surplus, but let's not delve into it in detail for now. The Trump administration's implementation of these "equivalent tariffs" appears to be setting rules and imposing fines on countries other than China, in order to "save money" in the new sovereign wealth fund. In fact, they want to conduct global tax inspections and make up for taxes, prepare start-up funds for sovereign wealth infrastructure, and invest in major projects such as Ukraine's mineral mining and Panama Canal renovation, relying on large-scale infrastructure to drive employment and manufacturing recovery. In addition, it plans to issue Century Bonds to reduce the dividend payout of the US $36 trillion treasury bond, lower the interest rate of treasury bond, attract global institutions to buy US treasury bond, and increase the capital inflow of sovereign wealth funds. But whether this wishful thinking can be executed depends on the trend of the US dollar. If the US dollar continues to be overvalued, American exports will lose competitiveness and manufacturing will also be affected. From 2011 to now, the overall real US dollar index of major trading partners has risen, with an appreciation of nearly 45%. Looking at employment, the United States has been raising interest rates to curb inflation since March 2022, and by July 2023, the interest rate has reached 5.5%. However, the CPI has still increased by 21.8% compared to 2020. After the interest rate hike, the number of non farm employees in most months is lower than the average of the first half of the year before the hike, and the number of employees in February 2025 is only 40% of the previous average. Trump is definitely eager to improve this situation. In addition to "equivalent tariffs", there are many tariff policies that may come into effect after April 2, such as upgrading trade restrictions with China, implementing secondary tariffs on Venezuela, and imposing a 25% tariff on imported cars. Countries such as the European Union and Canada may also retaliate with retaliatory tariffs. Before the epidemic, China led the RCEP to address unilateral trade and anti globalization, but it was disrupted by Biden. Now Trump has come up with this again, which is expected to accelerate the construction of organizations that are in line with their own trade advantages. In the next three years, both the United States and China may take the lead in establishing a new trade organization system, while the European Union and Japan are likely to be in a stalemate, and the United States will ultimately not be able to get any good results.