US President Donald Trump asserted on Friday that his tariff strategy is “doing really well,” even as China raised its levies on American goods to 125%, intensifying the trade conflict between the world’s two largest economies. The escalating tit-for-tat measures have unsettled global markets, with investors offloading US government bonds, the dollar weakening, and stock markets experiencing volatility.
The latest round of tariffs has seen the US imposing duties of up to 145% on Chinese imports, a significant increase from earlier rates. In retaliation, Beijing has elevated its tariffs on US goods to 125%, targeting key sectors such as agriculture and energy. This escalation has raised concerns among economists and industry leaders about the potential for prolonged economic disruption and inflationary pressures.
Financial markets have reacted sharply to the developments. The yield on 10-year US Treasury notes spiked, reflecting investor anxiety over the fiscal implications of the trade war. The US dollar index fell against a basket of major currencies, while equity markets experienced significant fluctuations as traders grappled with the uncertainty.
Economists have voiced apprehension about the broader economic impact of the escalating tariffs. Joseph Stiglitz, a Nobel laureate in economics, warned that the trade war could lead to stagflation—a combination of stagnant economic growth and rising inflation. Simon Johnson, a former chief economist at the International Monetary Fund, criticized the unpredictability of the administration’s trade policy, suggesting it undermines business confidence and investment.
The business community has also expressed concern over the tariff increases. Jamie Dimon, CEO of JPMorgan Chase, cited the trade tensions as a contributing factor to economic turbulence and cautioned about the risk of a recession. Companies reliant on global supply chains are facing increased costs and uncertainty, prompting some to reconsider investment plans and supply chain strategies.
Despite the backlash, President Trump has defended his tariff policy as a means to protect American industries and reduce trade deficits. He has argued that the tariffs will incentivize domestic manufacturing and level the playing field for US businesses. However, critics contend that the approach may have unintended consequences, including higher consumer prices and strained international relations.
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