Volatility by Design: The Strategy Behind the Storm (tariffs and tradewar)

Why the markets keep misfiring, and what traders, executives, and policymakers need to understand about the new doctrine of disruption.

Published: April 8, 2025

Author: Moses Zaree

It’s oddly amusing, though perhaps mildly frustrating, for someone like me, a former professional trader, to watch the trading floor still fall prey to the same impulsive behaviors. Sorry, chaps, but this is a direct critique. Let’s be honest: Trump didn’t blindside anyone with tariffs. He’s been telegraphing this move for years. April 4th, 2025 was not the beginning, it was the culmination.

The real problem is the chronic lack of introspection in the financial community. Traders, analysts, portfolio managers, so many seem locked in short-termism, surprised by outcomes that were strategically obvious months in advance. I remember vividly my days on the desk, managing strategic allocation across multiple institutional accounts, operating with a six-screen Bloomberg setup humming around me. Between macro indicators, geopolitical noise, and price action metrics glowing across the terminals, the hardest part wasn’t seeing what was coming. It was balancing conviction against collective immaturity.

"Footnote for desk warriors: hydration matters, for balance sheets and skin alike. Cleanser, moisturizer. SENSAI if prudent; La Prairie if the P&L allows."

What’s happened this week is a textbook example of misreading macro with a trader’s tunnel vision. Kevin Hassett, Director of Trump’s National Economic Council, casually floated a 90-day tariff pause in an interview, more a test balloon than a formal position. But before the ink dried on the transcript, algos were already digesting it, volatility algorithms flickered, and trading desks started slamming execution keys across CME Globex and ION platforms as if the doctrine had changed overnight.

"the president is going to decide what the president is going to decide"

Kevin Hassett, Director of White House, National Economic Council

Date: 07-04-2025

Then came the whiplash: Trump stepped up, called it fake news, and instantly crushed the rebound narrative. The result? A chaotic Monday bounce that had no legs, driven entirely by headline-chasing traders and mainstream media amplifying a false pivot.

Here’s the hard truth: this market is not confused because of policy, it’s confused because it refuses to accept that policy has changed.

Trump’s economic doctrine is not playing by the old rulebook. It’s “subversion by leverage,” or to put it more bluntly: “my way or the tariff highway.”

And if you haven’t figured that out yet, for the sake of financial stability, please step away from the execution book in your order management system, and maybe hand over the keyboard until you’ve read more than one Bloomberg headline.

Now, let’s zoom out and get a clean read of the battlefield. Trump’s tariffs have landed, and the responses are telling.

Here's what we know:

• The UK, Israel, UAE, and Saudi Arabia are sitting at the 10% baseline, signaling that strategic diplomacy still holds weight.

• China, Japan, Taiwan, and the EU got slammed, some facing tariffs north of 40-50%, effectively a blockade on pricing competitiveness.

• Semiconductors and energy have been partially shielded, giving room to maneuver for certain players caught in the tech and commodity crossfire.

• Russia, Cuba, Belarus, and North Korea? Quietly excluded, illustrating that this isn’t about allies vs. enemies. It’s about leverage and position.

But here’s the real check-in: China’s exports to the U.S. have gone nowhere in the last 13 years. Flat. Stagnant. Meanwhile, their exports to the rest of the world have grown by over 80% in that same time frame.

"When "analysts" suggest Trump holds a uniquely potent card against Xi Jinping via tariffs, based on $400 billion of U.S. imports (roughly 10% of China’s exports, less than 2% of its GDP), you have to ask, what are we even talking about?"

Tariffs aren’t about “winning trade” in a classical sense. They’re about shifting strategic gravity. Trump isn’t trying to rebalance trade books, he’s trying to force industrial reinvention, both domestically and internationally. And yes, volatility is part of the design.

This isn’t market failure. It’s market friction, engineered friction, to force a reset.

But there’s another front opening in this economic reset, one that doesn’t involve tariffs, shipping lanes, or currency swaps. It’s a war on intellectual property, and China may be preparing to launch a full-scale offensive. What’s critical to understand is that China operates under a “first-to-file” intellectual property (IP) regime. That means whoever registers the IP first, regardless of original use or origin, gets the exclusive legal rights within China.

Historically, this has been a battleground for foreign firms attempting to protect their assets in the Chinese market. Until now, China has kept this rule within a range of WTO-acceptable practices, largely to maintain access to global trade.

That may be about to change.

In recent exchanges with sources in both Beijing and Washington (I won’t disclose their roles, for obvious reasons), there’s rising concern that China’s State Council is now actively discussing a pivot in its IP protection policy. The logic?

"If the U.S. is prepared to weaponize tariffs and cripple China’s exports, then China may retaliate not just through reciprocal tariffs, but by removing protections on U.S. IP entirely."

Imagine the implications.

Open authorization for Chinese firms to replicate U.S. products one-to-one, without the legal constraint of reengineering or patent circumvention. We’re not talking about low-end knockoffs anymore. China has the automation, the manufacturing scale, the advanced material science, and the engineering talent to produce premium, high-fidelity copies of everything from semiconductors to biotech instruments, defense components, consumer electronics, and EV technologies.

If IP law is sidelined, U.S. firms lose pricing power overnight. The ripple effect through global value chains would be catastrophic. Companies whose margins and market positions rely on patent protection and branding, think medical devices, aerospace, industrial software, could be obliterated by 95% cheaper but still high quality replicas flooding the global market.

What’s worse? Many global buyers, especially in BRICS+ economies and parts of the Global South, would welcome those cheaper alternatives, not out of disloyalty, but because the economics make sense. They no longer have to pay premium prices dictated by U.S.-origin IP enforcement. That undercuts the U.S. innovation economy at its core.

"And here's the brutal irony: China didn’t build this vulnerability. The United States did, by undermining the very global institutions that once safeguarded trade norms."

As many of us have argued before, Washington's recent abandonment of multilateralism has removed the enforcement architecture that kept these systems in check. Now, there’s nothing to stop China from playing hardball.

But if we zoom out further, there’s an even larger truth hiding in plain sight. Let’s talk about the elephant in the room, the U.S. dollar-centric global trade regime. It’s astonishing how few analysts or commentators bring this up when dissecting tariffs, inflation, or even de-globalization.

The simple truth is: the only true beneficiary of a dollar-based global system has been the United States.

"BRICS+ economies and parts of the Global South, would welcome those cheaper alternatives, not out of disloyalty, but because the economics make sense."

By having the dollar as the reserve currency and primary medium for global trade, the U.S. has enjoyed near-limitless debt capacity. Washington can print more dollars, issue more Treasuries, and push deficits further, without bearing the same consequences other nations face. Those debts are then absorbed by global investors, central banks, and sovereign wealth funds around the world who need to hold dollar-denominated assets.

In return? That liquidity funds the U.S. military-industrial complex, the very tool used to police, intervene, or destabilize regions when deemed geopolitically necessary. So when China and BRICS nations say, “we’re not supporting this system anymore,” it’s not ideology, it’s self-preservation.

De-dollarization isn’t a theory anymore. It’s an operational roadmap being tested in live environments: bilateral trade in yuan, the development of SWIFT alternatives, domestic payment ecosystems beyond Visa and Mastercard, and commodity settlements in non-dollar currencies.

And once the Trump era accelerates this divergence, through tariffs, sanctions, and unilateral leverage, the incentive for nations to exit the dollar sphere becomes existential.

So for those still stuck in the narrow framing of tariffs as a “bad trade policy,” let’s get something straight: This isn’t about tariffs. This is about imperial survival. This is a global hegemon, scrambling to stay afloat, deploying every tool it still controls, economic, diplomatic, military, informational, to preserve relevance in a world where bipolarity is no longer assured.

We’re watching a global shock doctrine in motion, where unpredictability is weaponized and friction is engineered to reset the board. It’s no longer about managing markets, it’s about managing the endgame of American unipolarity.

And that’s why this moment matters.

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Retaliation as Strategy: Global Countermoves Take Form

As Trump’s tariff doctrine escalates, major global powers, China, Canada, and the EU, are responding with deliberate, strategic countermeasures designed to reshape U.S. behavior and reinforce their own relevance in a shifting global order.

China struck first, imposing 34% tariffs on U.S. goods and restricting rare earth exports, vital inputs for American tech and defense sectors. Simultaneously, it filed a WTO complaint, flipping the script by casting itself as the defender of rules-based trade. Beijing also launched anti-dumping investigations into key U.S. exports like solar panels and medical devices, started offloading U.S. Treasuries, and hinted at a Yuan devaluation, all while preparing a domestic stimulus package. It’s a multipronged counterattack: legal, monetary, industrial, and reputational.

Canada’s response, led by Prime Minister Mark Carney, was sharp. A 25% tariff on C$30 billion in U.S. goods was followed by formal WTO filings and a challenge under USMCA provisions. While the WTO’s authority is increasingly questioned, these legal moves serve more as political signaling than enforceable deterrents, showing Canada won’t stand by quietly.

The EU, hit with 20% tariffs (and more on steel, aluminum, and autos), is preparing a mirror list of U.S. exports for retaliation. Iconic American products, bourbon, Harley-Davidsons, jeans, are targeted not by accident, but by strategy: pressure U.S. swing states and political bases. Beneath the rhetoric lies a deeper concern, Europe’s fading confidence in globalization. With growing internal divides and economic pressures, even leaders like UK’s Keir Starmer now openly declare “Globalization is dead.”

Across the board, these retaliatory moves aren’t emotional, they’re deliberate repositionings. Whether through legal channels, trade barriers, or monetary tactics, global powers are recalibrating their stance, not just against U.S. tariffs, but against the entire structure of American-dominated trade.

"The irony is stark: Washington’s own multilateral creations, WTO, USMCA, global IP frameworks, are now being used to challenge its behavior. In dismantling the old order, the U.S. has empowered its rivals to write the rules of what comes next."

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Negotiation as Strategy: Playing the Long Game

While some nations chose the path of retaliation, others have taken a different route, quiet diplomacy over confrontation, pragmatism over provocation. India, the UK, Japan, South Korea, Argentina, and Mexico have opted to negotiate, recalibrate, and reposition, rather than risk a prolonged trade war they can’t win outright.

This isn’t weakness, it’s calculation.

These countries understand that the rules-based order is no longer a reliable shield. The new system is fluid, transactional, and power-based, where bilateral leverage often trumps institutional protections. In this environment, speed and strategic alignment matter more than principle.

India, despite being hit with a mid-tier 26% tariff, was spared the more punishing rates seen elsewhere. Rather than retaliate, New Delhi has accelerated backchannel negotiations toward a bilateral trade agreement. India’s calculus is clear: leverage its geopolitical value as a democratic counterweight to China, offer targeted concessions, and extract favorable terms, before Washington locks in more aggressive positions. If successful, India could walk away from this disruption not with wounds, but with new trade corridors and strategic capital.

"Many nations are holding bilateral talks behind the scenes while negotiating with the U.S., which only increases pressure on Washington."

The United Kingdom is following a similarly pragmatic playbook. Hit with a 10% baseline and additional auto duties, London has chosen not to escalate. Prime Minister Keir Starmer, echoing the broader mood, declared that “globalization has failed millions” and recognized the legitimacy of a nationalist economic pivot. By acknowledging Trump’s rationale rather than contesting it outright, the UK is betting that flexibility now will translate into exemptions or softer terms down the line. Trade envoys are already working quietly on adjustments to avoid further escalation.

Japan, long tethered to the U.S. via defense and economic frameworks, is playing its cards with surgical precision. While Japanese automakers feel the immediate pain, Tokyo has initiated discreet diplomacy, including top-level dialogues timed around upcoming IMF and World Bank meetings. Simultaneously, Japanese firms are announcing increased U.S. investments, creating jobs and reducing visible trade imbalances, messaging Trump can use domestically. It’s an effort to be seen not as a competitor, but as a cooperative stakeholder in America’s industrial revival.

Let’s not forget, everyone’s watching each other. Many of these nations are holding bilateral talks behind the scenes while negotiating with the U.S., which only increases pressure on Washington and gives others more strategic leverage in navigating the mess it helped create.

South Korea is walking the same tightrope. No tit-for-tat tariffs, at least not yet, but an assertive effort to highlight alliance value and offer sectoral cooperation, particularly in electronics and energy. Argentina, understanding its trade dependence and fiscal fragility, is negotiating access for its beef, lithium, and agricultural exports, while offering policy reforms aligned with U.S. demands. It’s not submission, it’s geoeconomic maneuvering.

And then there’s Mexico, a nation economically intertwined with the U.S. to a degree that makes retaliation almost self-destructive. Rather than fight fire with fire, Mexico is navigating through extended USMCA channels, exploring side deals on border security and trade quotas to insulate key sectors without open confrontation.

What unites these players is a shared understanding: this is no longer a world of symmetrical treaties or collective bargaining. It’s a geopolitical marketplace, where survival depends on offering something the U.S. deems useful, jobs, votes, access, or alignment.

Their common strategy? Move fast, stay relevant, and avoid the "loser" column while Washington is still sketching the scoreboard.

"For now, in this era of volatility by design, they know the real game isn’t just avoiding tariffs, it’s staying indispensable."

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Defensive Strategies: Life Rafts in a Trade Storm

While some nations retaliate and others negotiate, a third group, Taiwan, Japan, South Korea, and China domestically, are going defensive. They’re deploying stimulus, tax relief, and industrial support to shield key sectors and buy time. Taiwan has launched a $2.7 billion package; Japan is preparing sector-specific incentives; South Korea signals monetary easing; and China is reinforcing its internal economy.

This isn’t retreat, it’s resilience. These nations know the tariff standoff could last, so they’re building buffers instead of burning bridges. It’s a bet on long-term competitiveness over short-term bravado.

Meanwhile, the U.S. position hardens. Trade adviser Peter Navarro warns that free trade deals mean nothing without dismantling non-tariff barriers. And Secretary Bessent's latest line, “we’ll negotiate not just with countries, but with companies”, signals a tectonic shift in U.S. tradecraft that could reshape how global business is done.