April 11, 2025
U.S. stock markets fell by around 4 percent on Thursday afternoon as investors assessed the worsening effects of the escalating trade war between the United States and China. President Donald Trump confirmed that tariffs on Chinese goods have now risen to 145% since he took office as President.
In a surprising development, U.S. government bonds also saw a decline. The 10-year U.S. bond yield surged to 4.37%, its highest level since February. The Nasdaq Composite, which is heavily weighted with technology stocks, dropped nearly 7%, with major companies like Apple, Nvidia, and others being hit. Global oil prices also fell by about 4%, with Brent crude trading below $63 per barrel.
According to a statement from the White House, the 125% import tariff on Chinese goods announced on Wednesday is an addition to the 20% tariff already imposed on China due to its involvement in supplying fentanyl and its precursors to the U.S. Additionally, Trump has maintained new tariffs on goods such as cars, steel, and aluminum.
Despite ongoing tensions between Beijing and Washington with no sign of resolution, the European Union (EU) has taken steps to delay its tariffs on U.S. goods for 90 days, allowing space for negotiations between the two parties. Ursula von der Leyen, President of the European Commission, stated that this action is meant to provide an opportunity for talks, but warned that the tariffs would be enforced if the negotiations do not yield satisfactory results.
Inflation in the U.S. also showed a larger-than-expected decline in March, but economists have warned that this drop is temporary and that the full effects of the trade war may not be felt until several weeks later, potentially leading to higher inflation pressures.
At the same time, China has emphasized that they are willing to engage in negotiations with the U.S., but not under pressure. President Trump stated that he is waiting for a response from Chinese President Xi Jinping to continue discussions. However, Beijing has made it clear that it will not submit to any form of coercion in the negotiation process.
In Asia and Europe, stock markets showed significant gains, with Taiwan and Japan recording increases of more than 9%, in response to developments in the U.S. markets.
The trade tensions between the U.S. and China continue to deepen, and the question of how these two nations will reach an agreement remains a major concern worldwide.