Global Markets in Turmoil. The Impact of New US-China Tariffs on the World Economy
On April 9, 2025, the United States and China escalated their trade conflict with a dramatic exchange of tariff increases. The Biden administration imposed a 104% tariff on a broad range of Chinese imports, citing long-standing concerns over intellectual property violations and trade imbalances. In immediate retaliation, Beijing raised tariffs on American goods from 34% to 84%, effective April 10 at 12:01 a.m., Beijing time.
Just hours later, President Donald Trump—who recently returned to office—announced an additional escalation, lifting tariffs on Chinese imports to 125%. Calling China “the largest threat to American industry since the Cold War,” he framed the move as a defense of US jobs and national sovereignty. China, for its part, accused Washington of deliberate economic aggression and pledged “retaliation at scale.”
Financial markets responded with sharp declines. In Asia, the Hang Seng Index in Hong Kong dropped by 3.76%, while the Nikkei in Tokyo lost over 2%. European exchanges followed with widespread losses, and US futures pointed to continued turbulence on Wall Street. Tech stocks were particularly vulnerable, as semiconductor and electronics supply chains face potential disruptions.
The implications go well beyond the stock markets. Economists warn that this tit-for-tat escalation could derail global growth. The IMF has already revised its projections downward, estimating that sustained trade barriers between the world’s two largest economies could shave 0.5 to 0.7 percentage points off global GDP growth this year. Supply chain volatility, consumer price inflation, and declining investor confidence are likely side effects.
Key sectors in both economies are bracing for impact. In the United States, agricultural producers—especially soybean and corn exporters—face the reactivation of Chinese countermeasures that had previously decimated their market access. In China, export-oriented manufacturers worry about order cancellations and reduced demand, with some already reporting postponed shipments.
The European Union has not remained passive. Brussels has criticized both parties for destabilizing the global economy and confirmed the activation of a counter-tariff mechanism on selected US products, starting with a 25% duty on key exports including bourbon, motorcycles, and certain tech components. Officials from the European Commission have urged a return to multilateral dialogue under the WTO framework.
Amid this global uncertainty, companies are reassessing their production and distribution strategies. Some firms are accelerating the relocation of supply chains to Southeast Asia, Mexico, and Eastern Europe, while others are lobbying for government exemptions or tax relief measures to mitigate the cost of the new tariffs.
Analysts agree that the long-term costs of this conflict could be severe. Beyond economic figures, what is at stake is the stability of the global trade system itself. As protectionist rhetoric intensifies on both sides, the possibility of a durable solution appears increasingly remote—yet more urgent than ever.
economy, international trade, tariffs, USA, China, financial markets,