The Tariff Tango: A Memo From the Trading Floor

TO: Readers who still think fundamentals matter
FROM: Your increasingly cynical correspondent
RE: The week Trump's trade war met crypto's reality check
DATE: August 5, 2025

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The phones stopped ringing around 3:47 PM Friday.

The S&P 500 had just closed down 2.4% for the week, snapping what had been a decent run and reminding everyone that gravity still exists. But here's the thing: nobody seemed surprised. The surprise would have been if we hadn't sold off after Trump's Thursday executive order slapping "reciprocal" tariffs of 10% to 41% across a host of countries, pushing the effective tariff rate across the entire economy to between 15% and 20%.

Welcome to 2025, where trade policy is monetary policy, and monetary policy is whatever the president tweets at 6 AM.

I've been doing this long enough to remember when tariffs were an academic curiosity, something you studied in Econ 101 and promptly forgot. Now they're the primary driver of everything from equity multiples to crypto liquidations. Bitcoin saw $228 million in forced selling while Ethereum faced $262 million in liquidations, with analysts predicting Bitcoin could fall as low as $80,000 before any meaningful recovery.

The irony is exquisite. Bitcoin gained 8% in July while ether surged more than 49%, with Ether ETFs pulling in over $5 billion in inflows. The digital asset crowd was partying like it was 2021 again. Bitcoin had hit $122,379 on July 14, and the bulls were calling for $140,000 as the next target.

Then reality called. Turns out when you crater traditional risk assets with protectionist policies, crypto doesn't magically decouple and float to the moon. Shocking, I know.

What's particularly galling is how predictable this all was. The Fed held rates steady at 4.25% to 4.5% in July, with Powell explicitly noting uncertainty about tariffs' impact on inflation. Translation: "We have no idea what this lunatic is going to do next, so we're sitting tight." Central bank speak for "We're flying blind."

The real kicker came Thursday when some unnamed company made its NYSE debut, closing at $115.50 for a 250% gain on IPO day, ending with a market cap of almost $68 billion after pricing shares at $33. In a week where the broader market was getting hammered by trade war fears, someone still managed to engineer a classic meme-stock pump. Because apparently we've learned nothing from the past four years of boom-bust cycles.

This is where we are now: living in a world where equity valuations are secondary to presidential whims, where crypto markets pretend to be uncorrelated until they're not, and where IPO pricing has become pure performance art. The resilient job market has supported stock gains, but Washington policy has been the primary market driver – and when that policy is being made by executive order on a Thursday afternoon, you get weeks like this one.

The crypto evangelists keep saying this is different, that digital assets are the future of money, immune to the messy realities of nation-states and their trade wars. Meanwhile, major exchanges are processing hundreds of millions in liquidations because someone in Washington decided to tax imports.

I'm not saying crypto is worthless. I'm saying it's not magic. When risk appetite evaporates, everything correlated to risk gets sold. Institutional accumulation and low volatility matter right up until they don't.

The week ahead brings more data, more potential policy surprises, and presumably more opportunities for markets to remind us who's really in charge. Spoiler alert: it's not the algorithms, the ETFs, or the true believers.

It's whoever has the pen to sign the next executive order.

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The author is long skepticism and short patience. Views expressed are personal and subject to change without notice, much like trade policy.