Context:
The US-China trade war intensified as President Trump threatened to raise tariffs on Chinese imports to over 100%. China condemned the move as “blackmail”, vowing to “fight to the end” if the US follows through. Trump stated he’s waiting to hear from China before enacting new duties.
Global Market Impact
- Stock markets, after significant losses, showed signs of recovery.
- US stocks posted gains following a heavy selloff.
- Japan’s Nikkei rose 6%, Chinese blue chips climbed 1%.
- Analysts fear a global recession and further disruption to decades-old trade norms.
EU and Asia Respond Cautiously
- The European Union proposed 25% countertariffs on select US goods including soybeans, nuts, and sausages.
- Bourbon and alcohol tariffs were considered but not included.
- President Trump rejected the EU’s zero-tariff proposal on industrial goods, accusing Europe of unfair trade and military dependence.
- Other Asian economies adopted softer diplomatic tones, contrasting China’s hardline stance.
China’s Six Major Countermeasures
- Ban on US film imports
- Significant tariff hikes on US agriculture (soybeans, sorghum)
- Ban on US poultry
- Suspension of US-China fentanyl cooperation
- Countermeasures in services trade
- IP rights investigations into US firms in China
Economic and Political Fallout
- Citi lowered China’s 2025 GDP forecast to 4.2% from 4.7% citing external risks.
- Euronext CEO said the US now resembles an emerging market, using strategic tariffs.
- China’s manufacturers in sectors like tableware and flooring are now eyeing overseas relocation to escape tariffs.
