Global Trade Tensions Escalate Further Amid US-China Tariff Dispute and Economic Uncertainty
Published on 4.18.25
The current state of international relations is marked by heightened uncertainty and tension, particularly in the context of trade policies between major economies. A recent meeting between US billionaire Ray Dalio and senior Chinese leaders has sparked speculation about a potential deal to strengthen the yuan in exchange for easing tariffs.
China's economic struggles are already evident in declining asset prices, consumer deflation, and high unemployment. China's economy is heavily reliant on exports to the US, with a 14.7% share in 2024, and a significant decline could impact GDP by up to 2.5%. The IMF has downgraded its growth projections for China.
The US has imposed tariffs on goods from all countries, prompting retaliatory measures from China, the EU, and other countries. This development comes as the US has also imposed tariffs on Taiwanese goods, raising concerns over its intentions towards the island. President Lai Ching-te of Taiwan has called for deeper trade ties with the US to address security concerns.
The potential loss of trade would have far-reaching consequences, including factory shutdowns, shipping disruptions, price drops for key commodities, and increased unemployment. IMF Managing Director Kristalina Georgieva has warned that the current state of global trade policy is creating "off the charts" uncertainty, citing recent US Treasury yield curve movements as a warning sign.