Tariff is 'Civil War'?

Trump’s Tariff Blitz: A Currency War, or a Wall Street-Main Street Civil War?

As President Donald Trump escalates his tariff war, Wall Street is melting down. And with it, so is demand for the U.S. dollar. The Dollar Index has dropped significantly, raising questions: Is the collapse of asset markets part of Trump’s grand design? Could dollar weakness be a deliberate goal?

To decode the strategy behind Trump’s second-term economic policy, one must distinguish Wall Street from Main Street.

Wall Street refers to the financial economy—S&P 500, Nasdaq, U.S. Treasuries, and other capital markets. Main Street is the real economy, the factories and workers that produce tangible goods. That’s where Trump’s real focus lies: manufacturing.

In a report by Trump’s economic advisor, Stephen Miran—now dubbed the “Miran Report”—the argument is made that the dollar, as a global reserve currency, is trapped in perpetual overvaluation. This chronic dollar strength, he argues, structurally anchors the U.S. in a perpetual trade deficit.

In a normal economy, trade deficits lead to currency depreciation, helping to restore balance. But reserve currency status immunizes the dollar from this natural correction. Since the 1980s, Reaganomics—championing free trade and corporate tax cuts—has exacerbated this structure. Keynes gave way to laissez-faire orthodoxy. The result? Wall Street soared, but Main Street crumbled.

Globalization accelerated the decline. Over 5 million U.S. manufacturing jobs vanished. Today, the top 10% of Americans own 90% of national wealth—a ratio far worse than the Pareto Principle's 80/20 guideline. The textbook looks quaint by comparison.

Enter Trumponomics, where “weaker dollar” isn’t just a tactic—it’s the goal. The Miran Report outlines how tariffs can be used as leverage to force yuan appreciation. The strategy: impose punitive 60% tariffs on Chinese goods, leaving Beijing with two options—devalue the yuan to remain competitive (risking massive capital flight), or come to the table. The latter is what Trump’s team is counting on: tariff rollbacks in exchange for yuan strengthening—which equals dollar weakening.

Whether Xi Jinping plays along is uncertain. Treasury Secretary Scott Bessent recently warned, “Tariffs hurt exporters more. There’s no point in retaliating.” Because the U.S. is an importer, it’s structurally resistant to countermeasures. But China hit back with rare earth export bans—non-tariff weapons in this high-stakes power contest.

Yet while China gears up, Trump may already be scoring in another arena.

Wall Street is cracking—and the weaker dollar is materializing.

The Numbers Behind the Strategy

Global forex markets see roughly $6.6 trillion in daily dollar transactions, but only 0.5%—about $40 billion—is for actual trade. The remaining 99.5% fuels capital markets—stocks, bonds, derivatives. In short: the dollar lives and breathes on asset flows, not real goods.

When Trump launched his tariff offensive:

On April 4, the S&P 500 closed at 5,074.08. Its market cap plummeted to $45.1 trillion, down $9.5 trillion (-17.4%) from its February 19 peak.

The Nasdaq fell 10% from its December 2024 high, and is down 8.2% year-to-date.

Money Market Funds (MMFs) surged. As of April 2, MMFs held a record $7.03 trillion, up $17.6 billion in a week, primarily from individual investors fleeing risk assets.

Meanwhile, the Dollar Index slid from 110 (Feb 19) to 103.02 (Apr 4)—a 6% decline.

Then came the blow from Wall Street heavyweight JP Morgan. On April 4, it slashed its U.S. GDP forecast for 2025 from +1.3% to -0.3%. The bank warned of rising unemployment (above 5%) and inflation rising 1–1.5 percentage points—a classic stagflation scenario.

The White House dismissed the Wall Street crash as mere capital rotation. Main Street, they argue, remains strong.

But in a deeply entangled global system, Wall Street and Main Street are not separate organisms—they are interdependent organs in the same body. While Trump’s advisors believe Main Street will escape the tariff war unscathed, that’s a bold bet. Still, they may be right in one sense: Main Street might suffer less than Wall Street.

In this light, the tariff war becomes something more than geopolitical. It becomes ideological—a civil war within America’s economic soul. Trump is signaling:
“Don’t invest in U.S. stocks. Build U.S. factories.”

It’s a bold declaration.
And the world is listening.