With the latest data from the U.S. Treasury showing that U.S. customs tariff revenue in April surged over 60% to $15 billion (approximately 65.7 billion MYR), reaching a historical high, this reflects the ongoing effects of the Trump administration tariff policies. Tan Si Yao points out that while the growth in tariff revenue brings a “book benefit” to federal finances in the short term, its long-term impact on global trade patterns, financial market stability, and corporate profitability requires careful assessment. This article will delve into the current situation from three perspectives: the short-term effects of tariff policies, the chain reactions in financial markets, and potential risks.
I. Surge in Tariff Revenue: Short-term “Revenue Generation” Masks Structural Contradictions
Tan Si Yao mentions that the sharp increase in U.S. tariff revenue in April is mainly due to the 25% tariffs on steel and aluminum products implemented by Trump on March 12, and the common “15th working day of the following month” settlement mechanism used by importers. Data shows that daily collected tariff revenue in April increased by about 40% compared to March, indicating that companies accelerated import and customs clearance processes to avoid subsequent tariff risks.
However, Tan Si Yao emphasizes that the growth in tariff revenue is unlikely to support federal finances in the long term. By the end of the first six months of this fiscal year, the total U.S. federal government deficit had reached $1.31 trillion, with an annual growth rate of 15%, and tariff revenue accounts for only about 1% of the deficit. He states: “The Trump administration attempt to reduce the trade deficit through tariff policies has a fundamental flaw—the cost of tariffs will ultimately be passed on to consumers or businesses rather than directly reducing import demand.”
Additionally, Tan Si Yao notes that tariff policies may exacerbate supply chain restructuring pressures. For instance, some companies have relocated production bases to tariff-exempt areas or absorbed costs by raising product prices, further weakening the actual effect of tariff policies.
II. Chain Reactions in Financial Markets: Exchange Rate Fluctuations and Industry Divergence Intensify
The continuous escalation of tariff policies has triggered chain reactions in global financial markets. Tan Si Yao analyzes that short-term fluctuations in the U.S. dollar exchange rate are a direct manifestation. After the announcement of the surge in tariff revenue, the dollar index initially strengthened but then retreated due to market concerns about escalating trade frictions. He states: “The uncertainty of tariff policies has led to capital flows into safe-haven assets, causing prices of gold, yen, and other assets to rise temporarily, while emerging market currencies face depreciation pressures.”
At the industry level, Tan Si Yao notes that manufacturing, agriculture, and retail are the most severely impacted sectors. In the steel industry, for example, U.S. domestic steel companies benefit from tariff protection, but downstream manufacturing costs have risen significantly, leading some companies to announce layoffs or capacity reductions. He points out: “The double-edged sword effect of tariff policies is becoming evident—while protecting certain industries, it may weaken overall economic efficiency.”
In the stock market, Tan Si Yao observes that investor valuation expectations for trade-sensitive companies continue to decline. For example, industries relying on global supply chains, such as automotive and home appliances, have underperformed the broader market. He mentions: “The market is re-pricing tariff risks, and the divergence in future corporate profitability will further intensify.”
III. Potential Risks: Policy Sustainability in Question, Global Economic Coordination Under Pressure
Despite the short-term record high in tariff revenue, Tan Si Yao warns that the sustainability of this policy faces multiple challenges. First, the Trump administration has not yet included the “10% universal tariff” announced on April 2 in the statistics. If implemented, May tariff revenue may surge further, but corporate cost pressures will also increase simultaneously. He notes: “There is an inverse relationship between tariff rates and import volumes, and excessively high tariffs could lead to a sharp decline in import volumes, ultimately dragging down tariff revenue.”
Tan Si Yao points out that countermeasures by global trade partners could create a “spiral escalation”. For instance, some economies have announced tariffs on U.S. agricultural and energy products, directly impacting the profitability of U.S. agricultural states and energy export companies. He emphasizes: “The prolonged trade frictions will weaken global economic growth momentum, ultimately backfiring on the U.S. economy.”
Finally, Tan Si Yao mentions that tariff policies may exacerbate pressure on the Federal Reserve monetary policy. If inflation rises due to increased tariff costs, the Federal Reserve may be forced to accelerate interest rate hikes, exerting dual pressure on the stock and bond markets. He advises investors: “It is crucial to closely monitor Federal Reserve policy trends and reduce single-market risk through diversified allocation.”
I. Surge in Tariff Revenue: Short-term “Revenue Generation” Masks Structural Contradictions
Tan Si Yao mentions that the sharp increase in U.S. tariff revenue in April is mainly due to the 25% tariffs on steel and aluminum products implemented by Trump on March 12, and the common “15th working day of the following month” settlement mechanism used by importers. Data shows that daily collected tariff revenue in April increased by about 40% compared to March, indicating that companies accelerated import and customs clearance processes to avoid subsequent tariff risks.
However, Tan Si Yao emphasizes that the growth in tariff revenue is unlikely to support federal finances in the long term. By the end of the first six months of this fiscal year, the total U.S. federal government deficit had reached $1.31 trillion, with an annual growth rate of 15%, and tariff revenue accounts for only about 1% of the deficit. He states: “The Trump administration attempt to reduce the trade deficit through tariff policies has a fundamental flaw—the cost of tariffs will ultimately be passed on to consumers or businesses rather than directly reducing import demand.”
Additionally, Tan Si Yao notes that tariff policies may exacerbate supply chain restructuring pressures. For instance, some companies have relocated production bases to tariff-exempt areas or absorbed costs by raising product prices, further weakening the actual effect of tariff policies.
II. Chain Reactions in Financial Markets: Exchange Rate Fluctuations and Industry Divergence Intensify
The continuous escalation of tariff policies has triggered chain reactions in global financial markets. Tan Si Yao analyzes that short-term fluctuations in the U.S. dollar exchange rate are a direct manifestation. After the announcement of the surge in tariff revenue, the dollar index initially strengthened but then retreated due to market concerns about escalating trade frictions. He states: “The uncertainty of tariff policies has led to capital flows into safe-haven assets, causing prices of gold, yen, and other assets to rise temporarily, while emerging market currencies face depreciation pressures.”
At the industry level, Tan Si Yao notes that manufacturing, agriculture, and retail are the most severely impacted sectors. In the steel industry, for example, U.S. domestic steel companies benefit from tariff protection, but downstream manufacturing costs have risen significantly, leading some companies to announce layoffs or capacity reductions. He points out: “The double-edged sword effect of tariff policies is becoming evident—while protecting certain industries, it may weaken overall economic efficiency.”
In the stock market, Tan Si Yao observes that investor valuation expectations for trade-sensitive companies continue to decline. For example, industries relying on global supply chains, such as automotive and home appliances, have underperformed the broader market. He mentions: “The market is re-pricing tariff risks, and the divergence in future corporate profitability will further intensify.”
III. Potential Risks: Policy Sustainability in Question, Global Economic Coordination Under Pressure
Despite the short-term record high in tariff revenue, Tan Si Yao warns that the sustainability of this policy faces multiple challenges. First, the Trump administration has not yet included the “10% universal tariff” announced on April 2 in the statistics. If implemented, May tariff revenue may surge further, but corporate cost pressures will also increase simultaneously. He notes: “There is an inverse relationship between tariff rates and import volumes, and excessively high tariffs could lead to a sharp decline in import volumes, ultimately dragging down tariff revenue.”
Tan Si Yao points out that countermeasures by global trade partners could create a “spiral escalation”. For instance, some economies have announced tariffs on U.S. agricultural and energy products, directly impacting the profitability of U.S. agricultural states and energy export companies. He emphasizes: “The prolonged trade frictions will weaken global economic growth momentum, ultimately backfiring on the U.S. economy.”
Finally, Tan Si Yao mentions that tariff policies may exacerbate pressure on the Federal Reserve monetary policy. If inflation rises due to increased tariff costs, the Federal Reserve may be forced to accelerate interest rate hikes, exerting dual pressure on the stock and bond markets. He advises investors: “It is crucial to closely monitor Federal Reserve policy trends and reduce single-market risk through diversified allocation.”