Trump's tariff escalation adds new variables: the new geopolitical logic behind the 200% French wine tax

Trump’s policy toolbox’s big stick of tariffs is once again swung out. On January 20, he publicly threatened that if French President Macron refuses to join his “Gaza Peace Committee,” the United States will impose a 200% tariff on French wine and champagne. He also reiterated the Greenland plan, claiming Europe “cannot protect” the region. This is not only an escalation of trade threats but also a sign of the deep intertwining of tariff policies with geopolitical issues. US-EU relations are facing new tests.

The true logic behind the tariff threats

From trade tools to political leverage

Trump’s 200% tariff threat may seem aggressive, but its essence is transforming trade policy into a tool for geopolitical pressure. He openly stated in Miami that Macron “will be out of office soon,” which is a key point, indicating his goal is not genuine trade negotiations but to change Europe’s stance on issues like Gaza and Greenland through tariff threats. This blending of economic leverage with geopolitical issues has become routine in recent US-EU interactions.

Multiple conflicts running in parallel

Trump is simultaneously pushing on three fronts:

• Greenland sovereignty: claiming to impose a 10% tariff on Denmark and other countries
• Gaza Peace Committee: using tariff threats to pressure France to participate
• General pressure on European allies: imposing tariffs on eight European countries

This multi-front pressure strategy shows Trump is testing Europe’s unity and resilience under pressure.

Market reactions are unexpectedly calm

Crypto markets remain calm

According to the latest data, Matrixport shows that despite Trump’s renewed tariff threats, implied volatility for Bitcoin and Ethereum has only risen slightly. Interestingly, since mid-November, overall implied volatility has actually decreased significantly, with a total reduction of about 18-25 volatility points over the past two months. This indicates that the market’s sensitivity to such political events is diminishing.

Options market performance also supports this: weak willingness to chase gains, and no significant increase in downside hedging demand. Investors are more inclined toward “yield enhancement” strategies, such as increasing spot holdings of Ethereum while selling call options to collect premiums—typical of range-bound trading thinking.

Risk assets are under pressure but not collapsing

According to related reports, Trump’s tariff announcement is expected to dampen risk appetite in European stock markets, but no extreme reactions have been observed yet. This reflects that markets are gradually adapting to Trump’s “tariff threats-negotiation” cycle, beginning to distinguish between real threats and pressure tactics.

Europe’s firm response

Signs of unity

The response from EU leadership has been surprisingly firm. European Commission President von der Leyen, Council President Costa, and others have explicitly stated that Greenland’s sovereignty is non-negotiable, and tariff pressure will damage US-EU relations. Spanish Prime Minister warned that aggressive actions could cause significant impacts on NATO.

The 27 EU member states’ ambassadors plan to hold an emergency meeting, and the EU has also suspended trade agreements with the US—these are relatively rare coordinated measures.

Europe’s bottom line

From European leaders’ statements, they recognize that this is not just a trade issue but also involves strategic sovereignty and the fundamental nature of transatlantic relations. They warn that tariff pressure could divert Europe’s attention from Ukraine issues, allowing Russia and China to “sit back and profit.” This is a clear strategic judgment: US-EU division is detrimental to both sides.

Signals of the crypto industry’s shift

The “Trump moment” is over

Notably, according to the latest reports, Animoca co-founder Yat Siu stated that the crypto industry’s “Trump moment” has ended, and the next phase will be driven by real users, solid infrastructure, and regulation, rather than individual influence. This is an interesting judgment, indicating the market is returning from political hype to fundamentals.

Lessons from political figures issuing tokens

Trump’s TRUMP coin has fallen over 90% from its all-time high within a year, with its market cap dropping from hundreds of billions of dollars at peak to $2.45 billion. This case clearly shows that the correlation between political hype and token price increases is weakening. The market is beginning to realize that tokens without real user bases and use cases cannot sustain even with strong political backing.

Market outlook and uncertainties

Short-term volatility may increase

In the context of rising macro uncertainties, demand for safe-haven assets will increase. Traditional safe assets like gold and US Treasuries may see capital inflows, and crypto volatility could also rise accordingly. However, based on current implied volatility data, the market has not entered a state of extreme panic.

The second-order effects of Fed personnel changes

Meanwhile, the change in the Federal Reserve chairmanship is also noteworthy. The probability of Kevin Woor becoming the next Fed chair has surged to about 60%, which will influence future monetary policy directions. Trump’s style on personnel matters is unpredictable, and the final outcome remains uncertain, adding extra variables to the market.

Personal views

From current market reactions, investors remain cautious about the authenticity of Trump’s tariff threats. Whether tariffs will be implemented and to what extent depends on subsequent negotiations. Europe’s united response may cause Trump to reassess the cost-benefit of pressure tactics, making this a dynamic game.

Summary

Trump’s 200% tariff threat signifies that tariff policy has evolved from a simple trade tool into a means of geopolitical pressure, involving multiple fronts such as Gaza and Greenland. Market reactions are relatively rational; implied volatility has not surged significantly, indicating investors have learned to distinguish threats from actual actions. Europe’s firm response also shows that the test of US-EU relations has only just begun.

From the crypto industry perspective, the “Trump moment” is fading, and markets are returning to fundamentals. Political hype is no longer the main driver of token prices; real users, applications, and regulatory environments are key for the long term. In the short term, tariff escalation may boost demand for safe assets, but in the medium term, the actual progress of US-EU negotiations and Fed policies will be decisive.