Analysis of the Impact of the Sino-U.S. Trade Dispute on the Manufacturing Cycle and Inflation

In the long term, high tariffs will suppress demand and accelerate the decoupling of the industrial chain. Manufacturing costs in the United States are expected to rise by 8%-15%. A peak in inventory pressure may occur in 2026, leading to a downturn in the manufacturing cycle.

In terms of the market, the industrial sector of the US stock market may rise in the short term, but technology stocks are under pressure. The cryptocurrency market may fluctuate with changes in inflation and liquidity.

Investment advice: Pay attention to the Purchasing Managers' Index (PMI) and the first quarter financial reports. Be cautious when positioning in the manufacturing sector, and consider Southeast Asian stocks that may benefit from supply chain shifts.

Macroeconomic and Market Environment

The Sino-US trade dispute presents a "prisoner's dilemma" situation, with both sides unwilling to make the first concession, leading to a continuous increase in tariffs and gradually worsening economic losses. The positions of about 80 countries around the world will play a key role in the Sino-US game, especially regarding the escalation of the trade war and the issue of supply chain restructuring. The alignment of global economies will determine the direction and ultimate outcome of the game between China and the United States.

The game between China and the United States may shift from the current "prisoner's dilemma" to "hawk-dove game". The support of the global economic entities will determine whether China and the U.S. can end the trade dispute through compromise or hardline measures. Ultimately, the stability and development of the global economy may be profoundly affected by this game.

Fund Flow Analysis and Major Cryptocurrency Market Structure

External Capital Flow:

• This week, ETF funds have significantly inflowed 3.014 billion, and the funding situation has improved.
• The issuance of stablecoins increased by 2.17 billion this week, with the issuance level being moderate.

Market Sentiment Indicator:

• Stablecoin premium has risen above water, with only a slight premium.

Bitcoin ( BTC ):

• The technical aspect is at a high position on the four-hour timeframe, caution is needed for adjustments after the surge.
• The on-chain chip distribution is once again concentrated around $93,000.

Ethereum ( ETH ):

• The trend is weaker than BTC, the ETH/BTC ratio has maintained fluctuations and broke down this week, with funds continuously flowing back to BTC.
• The increase in active addresses on the chain may indicate that the phase of bottoming out is complete.

The Impact of Tariffs on Manufacturing Cycles

1. Business Feedback and Tariff Pressure

Survey data shows that concerns about tariffs have risen significantly among businesses. Nearly 30% of companies consider tariffs to be a top issue, and many expect prices for raw materials and intermediates to increase by 3%-4%.

Corporate response measures:

• Export Surge: Exports from China, Vietnam, and Taiwan grew by 20% from January to March, and US imports also increased by 20%.
• Restocking: Customers reserve low-cost inventory, boosting second-quarter stock.
• Transfer of orders: Textile and footwear production shifting to Vietnam/India, electronics shifting to Taiwan/Japan/South Korea/India, automotive parts shifting to Mexico/Canada

2. The Short-term and Long-term Impact of Tariffs on the Manufacturing Cycle

Short-term (2025 Q2-Q3):

• Strong export and production data, but the risk of inventory backlog is rising.
• Prices in industries such as consumer electronics, textiles and footwear, and automotive are rising, while sales are declining.
• The US industrial sector may rise by 3%-5%, but inflationary pressures are suppressing the performance of tech stocks.
• The cryptocurrency market may rise due to increased risk appetite, but inflation risks could lead to a pullback.

Long-term ( Q4-2026):

• Demand overdraft leads to a decline, with sales falling in multiple industries.
• The supply chain is accelerating its decoupling, with China and the United States each forming independent supply chain systems.
• In 2026, inventory destocking pressure will peak, and the manufacturing cycle will worsen.
• US tech stocks and the Nasdaq may drop by 5%-10%
• The cryptocurrency market may experience a pullback due to tightening liquidity, but long-term easing policies could lead to a rebound.

3. Key Observations

• Pay attention to the changes in the Purchasing Managers' Index ( PMI ) and price expectations in the second and third quarters.
• Closely track the second quarter export and industrial production data
• Analyze the guidance on tariff costs and demand in the Q1 financial reports of companies such as Apple, Nike, and Tesla.
• Pay attention to the Federal Reserve's policy response when inflation reaches 4%-5%, as well as possible tariff exemptions.

Summary

Tariff policies will have a profound impact on the manufacturing cycle. In the short term, there may be a rush to export and inventory buildup, while in the long term, it will suppress demand and accelerate supply chain restructuring. Investors should closely monitor indicators such as PMI and corporate earnings reports, exercise caution in positioning within the manufacturing sector, and consider investment opportunities in Southeast Asia that may benefit from supply chain shifts.