Background of the Trade Dispute
US President Donald Trump has pursued an aggressive tariff policy in recent months, targeting not only China but also other countries like the EU. These measures include a basic tariff of ten percent on all imports into the US, along with higher tariffs on dozens of other countries. The trade dispute with China has particularly escalated as both sides have raised tariffs against each other. Currently, tariffs on US goods in China stand at 125%, while the US imposes a total of 145% tariffs on Chinese imports.
Impact on the US Economy
Concerns about the potential negative effects of the trade dispute on the US economy have heavily weighed on Wall Street. The Dow Jones and other US indices have experienced significant losses in recent weeks as investors react to the uncertainty. The trade dispute could lead to higher prices for consumers and affect the competitiveness of US companies. Analysts warn of a possible mild recession in the US in 2025.
Impact on Global Markets
The trade dispute also has global implications. Stock markets in Asia and Europe have suffered from the developments as well. The Nikkei index in Tokyo and the SMI in Switzerland have incurred considerable losses. The uncertainty has led investors to avoid riskier assets and instead invest in safe havens like gold.
Impact on China
Despite the challenges posed by the trade dispute, China has surprisingly reported strong economic growth figures. Growth in the first quarter of 2025 was at 5.4 percent, exceeding expectations. However, China has also taken countermeasures, including restricting exports of critical raw materials and raising tariffs on US products.
Prospects for a Resolution
To mitigate the negative effects of the trade dispute, an agreement between the involved countries would be necessary. Experts are hopeful for negotiations that could lead to a reduction of tariffs. Such an agreement would not only stabilize the US economy but also the global markets.
Overall, the trade dispute presents significant economic and political challenges. The uncertainty is weighing on markets worldwide and could have long-term implications for the global economy.