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China strikes back with 125% tariffs on U.S. goods as trade war intensifies
The United States and China intensified their trade conflict, with both nations implementing significant tariff increases. The escalating tensions have led to heightened market volatility and growing concerns over global economic stability.
U.S. raises tariffs on Chinese imports to 145%; China retaliates with 125% tariffs on U.S. goods.
Major U.S. stock indices experience volatility amid trade tensions.
Investors shift towards safe-haven assets, with gold prices surging.
JPMorgan CEO warns of "considerable turbulence" due to escalating trade war.
U.S. and China exchange tariff blows
China on Friday retaliated against U.S. President Donald Trump’s country-specific tariffs by raising its levies on U.S. goods to 125% from 84%, the Chinese Finance Ministry said.
The Trump administration confirmed to CNBC on Thursday that the U.S. tariff rate on Chinese imports now effectively totals 145%. Trump’s latest executive order boosted tariffs on Beijing to 125%, stacked on top of a combined 20% fentanyl-related tariff imposed in February and March.
China's Ministry of Finance criticized the U.S. measures as "economic bullying" and pledged to counteract them firmly.
Market volatility amid trade tensions
The escalating trade war has led to increased volatility in financial markets. Major U.S. stock indices, including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite, experienced fluctuations as investors reacted to the heightened tensions. The dollar index fell by 1% to a six-month low, while gold prices surged above $3,200 per ounce as investors sought safe-haven assets. The yield on the US 10-year Treasury note approached 4.5% before settling around 4.4% on Friday and is on track to post a nearly 43bps increase for the week, signaling Treasuries may be losing their safe-haven appeal. This week’s bond market sell-off reflected a broader retreat by foreign investors from US assets amid growing concerns over the economic fallout from President Trump's trade policies.
Economic concerns and corporate warnings
JPMorgan Chase CEO Jamie Dimon warned that the U.S. economy faces "considerable turbulence" due to the escalating trade war. He expressed concerns about high inflation, fiscal deficits, and asset price volatility, cautioning that such instability could dampen consumer confidence and potentially lead to a recession.
Global implications
The intensifying trade conflict between the world's two largest economies has raised concerns about its potential impact on global economic growth. Economists warn that the prolonged trade war could disrupt supply chains, increase costs for businesses and consumers, and lead to a slowdown in global trade. As the situation develops, market participants and policymakers are closely monitoring the potential for further escalations and their implications for global economic stability.
