Last year around this time, Trump's tariff policies had just started to take effect. Looking back now, that wave of impact indeed reshaped the entire market landscape.

In January last year, after Trump took office, he quickly took action, starting with a 25% tariff on Colombian goods, then sequentially increasing tariffs on major trading partners like China, Canada, and Mexico. Especially in February, there was a wave of tariffs: a 10% increase on China, 25% on Canada and Mexico, and a 25% tariff on steel and aluminum, which directly stunned the market. By March, he further increased tariffs on copper by 25%. The overall rhythm was to keep escalating, with the market always guessing what the next move would be.

The logic behind Trump's tariff policies was actually quite clear: short-term use for negotiations (for example, trading tariffs on Canada and Mexico to control fentanyl and illegal immigration), and long-term aims to bring manufacturing back to the U.S. by raising import costs. But the real power lay in the triple strike—global reciprocal tariffs, differentiated tariffs targeting specific countries, and precise strikes on strategic industries like steel and chips.

How intense was the market reaction? On March 4th, the S&P 500 recorded its largest single-day drop since December. North American supply chains were directly shattered, especially in the automotive industry, where the cost of a vehicle could suddenly increase by $3,000. The currencies of Canada and Mexico depreciated sharply—8% for the Canadian dollar and nearly 12% for the peso. China also didn't sit idle; the yuan depreciated along with retaliatory tariffs of 10%-15% on U.S. agricultural products.

Inflation expectations were suddenly ignited. Among U.S. imported goods, Canada, Mexico, and China accounted for nearly half, over $1.3 trillion. Tariffs directly pushed up prices for imported agricultural products, energy, and lumber. Experts at the time predicted that if the price increases fully transmitted, PCE inflation could rise from 2.3% to between 2.6% and 3.0%, which would directly limit the Fed's room to cut interest rates. Businesses, uncertain about the future, began delaying investments, and consumers, expecting higher prices, started reducing spending, putting economic growth under pressure.

The most direct impact on the stock market was on several sectors. Automotive stocks bore the brunt, with traditional automakers like General Motors and Ford, as well as new players like Tesla and Rivian, all impacted. Companies heavily exposed to China, such as Air Products, NVIDIA, and Broadcom, also suffered. Industrial and solar energy stocks were also affected.

The foreign exchange market was even more interesting. Initially, the dollar temporarily weakened, but as tariffs were gradually implemented, the dollar strengthened again. However, as the market reassessed the negative impact of Trump's tariffs on the U.S. economy, the dollar came under pressure. Interestingly, the correlation between the dollar and traditional safe-haven assets like gold and the yen weakened, and they began to fluctuate independently.

In commodities, gold and silver surged due to strong safe-haven demand, but oil and industrial metals experienced increased volatility. Copper futures markets, in particular, saw panic spreading, with futures prices on NYMEX and LME soaring.

The impact on Taiwanese investors was also significant. Taiwan's exports to the U.S. account for about 15% of GDP, and companies like TSMC faced profit compression if tariffs were imposed. The New Taiwan dollar fluctuated sharply due to foreign capital seeking safe havens. The escalation of the trade war pushed up inflation, increased import costs, and suppressed retail and consumer stocks. Although Taiwanese firms accelerated shifting supply chains to Southeast Asia or the U.S., the short-term rise in costs hurt investor confidence.

Looking back now, that wave of Trump's tariff policies indeed changed the market ecosystem. In the short term, tariffs were expected to generate about $110 billion in revenue to support tax cuts, but Bloomberg Economics estimated that U.S. total imports could decline by 15%, GDP might fall by 0.4% to 1.3%, and employment could also face losses.

The key takeaway for investors is that, in the face of such high-level policy uncertainty, blindly betting on a single market or sector is too risky. Diversification is essential—not just in semiconductors, but also in biotech, green energy, and across regions like Europe and emerging markets. Additionally, closely monitoring U.S.-Taiwan trade negotiations is crucial, as policy changes could open new opportunities for related companies. Considering exchange rate risks, increasing the proportion of dollar-denominated assets, such as dollar deposits or U.S. Treasuries, is also a strategy to hedge against the depreciation of the New Taiwan dollar.