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The tariff war between the United States and China has reignited in 2025 with far-reaching implications for the global economy. With reciprocal tariff increases, geopolitical tensions and disruptions in global markets, it is essential to understand the origins, current situation and future implications of this conflict.
The trade tensions between the United States and China commenced in 2018 when the U.S., under President Trump, imposed tariffs on Chinese goods to address unfair trade practices. China retaliated with its own tariffs, escalating the conflict. During President Biden’s first term, there was some de-escalation, but most tariffs remained. In 2025, following Trump’s re-election, tensions intensified. In February, Trump increased tariffs on Chinese imports by 10%, followed by another 10% hike in March. China responded with tariffs on U.S. goods, including agricultural products and energy resources. By April, Trump had raised tariffs to 145% on Chinese goods, prompting China to impose a 125% tariff on U.S. imports.
The ongoing tariff war between the U.S. and China has significant global repercussions. Increased import tariffs have led to higher costs for businesses and consumers, slowing economic growth. The International Monetary Fund (IMF) has downgraded its global growth forecast for 2025 to 2.8%, a 0.5 percentage point decrease from earlier estimates. The U.S. economy is particularly affected, with projected growth at just 1.8% for the year. Inflation in the U.S. is also rising due to higher import prices from Chinese goods, with some reports suggesting it could reach 5% by September 2025. This economic strain impacts employment, investments, and consumer confidence, increasing the risk of prolonged economic uncertainty both domestically and globally.
Update April 23: President Trump announced that his administration is working towards a fair trade agreement with China and that tariffs would be substantially reduced in the near future. These statements raised hopes for de-escalation. However, the following day, China’s Ministry of Commerce refuted Trump’s claims, stating that no negotiations were taking place and that any assertions about progress in U.S.-China economic and trade talks were unfounded. Nevertheless, China expressed openness to dialogue and is considering exemptions for 131 U.S. products.
The video “White House holds briefing as U.S.-China trade war escalates” by CBS News provides an up-to-date overview of the growing tensions between the United States and China in 2025. During the press briefing, White House officials address recent tariff increases, the economic impact on the U.S., and the current state of trade negotiations. The video also covers China’s response, including the denial of ongoing talks and consideration of exemptions for certain U.S. products. This briefing offers valuable insight into the dynamics of the trade war and its potential consequences for the global economy.
The escalating tariff war has caused turmoil in global financial markets. Higher trade tariffs have increased volatility, leading to greater uncertainty for investors and businesses. Major multinational companies like General Motors and UPS have withdrawn their financial forecasts for the year due to the unpredictable economic environment. Banks such as HSBC are taking precautionary measures, increasing their provisions for potential bad loans by $200 million, reflecting growing concerns over the creditworthiness of businesses and consumers. Simultaneously, costs for raw materials, transportation, and production are rising. Companies like Adidas and Electrolux warn that higher production costs will inevitably be passed on to consumers, potentially fueling further inflation. This combination of rising costs and declining confidence hampers investments and economic growth, making global markets more fragile than ever.
While cryptocurrencies are often viewed as detached from traditional economic systems, they are not immune to geopolitical tensions. The recent escalation of the U.S.-China tariff war has had a significant impact on the crypto market. On March 4, 2025, increased trade tensions triggered a substantial shockwave in the crypto market. Within just 24 hours, nearly $1 billion in crypto positions were liquidated. Bitcoin’s price dropped by approximately 9%, while Ethereum saw a decline of over 11%. These sharp corrections are a direct result of heightened uncertainty among global investors. During times of economic turmoil, investors often seek safer assets, withdrawing capital from riskier investments like cryptocurrencies. This makes digital currencies particularly vulnerable to external economic and political events. Although the crypto market operates on a decentralized system, it clearly does not function in isolation. These developments underscore how closely the digital economy has become intertwined with the global financial system.
The future of the U.S.-China tariff war remains uncertain. While some analysts are cautiously optimistic about potential negotiations or a temporary truce, current developments indicate ongoing tensions. The continued increase in import tariffs and mutual economic pressures could inflict long-term damage on global trade, investments, and overall economic growth. Many businesses are postponing investments due to the uncertainty, and consumers are facing higher prices. The crypto market also remains sensitive to geopolitical shocks, with significant price fluctuations occurring with each new conflict or economic threat. The prices of Bitcoin and other digital currencies increasingly reflect global market sentiment. Both traditional markets and emerging financial systems are reacting strongly to the progression of this trade war. Without a sustainable resolution, global markets are likely to continue experiencing volatility. Businesses, investors, and consumers must remain vigilant.
The tariff war between the United States and China is leaving a profound impact on the global economy and financial markets. From reduced growth and rising inflation to instability in the crypto market, the consequences are being felt worldwide. Until a lasting solution is found, uncertainty will continue to dominate. Businesses, investors, and consumers would be wise to prepare for prolonged economic turbulence.
Entry price
23.6002
Exit price
23.7330
Date
May 16, 2025
Entry price
2.3620
Exit price
2.3487
Date
May 16, 2025
Entry price
170.6731
Exit price
171.6100
Date
May 16, 2025
*The trade percentages are the net percentages. The trade costs have already been deducted.
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