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Trump Reignites Trade War with EU as he Threatens 50% Tariffs on the Bloc

Written by IntaCapital Swiss on May 28, 2025. Posted in News & Reports. Leave a Comment

On Friday 23rd May, President Trump threatened to impose a 50% tariff on June 1st, 2025, on the EU (European Union) stating that current negotiations on trade between Washington and Brussels were going nowhere. President Trump has been complaining for a long time that the EU bloc has been unlawfully targeting U.S. companies with regulations and lawsuits, plus he feels that the Europeans have been deliberately taking their time over the current trade negotiations. Originally, on “Liberation Day” 2nd April 2025, the EU had been marked down for 20% tariffs, but were reduced to 10% until July 9th, to give enough time for trade talks to find common ground and a solution.

In response to the tariff threats by President Trump, the EU Trade Commissioner, Maroš Šefčovič, said “EU/US trade is unmatched and must be guided by mutual respect, not threats. We stand ready to defend our interests”. He went on to stress “the EU’s fully engaged, committed to securing a deal that works for both of us”. Many of the European governments reacted to the tariff threat warning that higher tariffs would indeed be damaging to both sides. Meanwhile, back in the Oval Office, President Trump also announced to reporters that new tariffs would be imposed unless EU companies moved their operations to the United States.

However, on Monday 27th May, following a phone call between the President of the European Commission Ursula von der Leyen and Donald Trump, where the EU signalled a more conciliatory approach by agreeing to accelerate trade talks, the President of the United States agreed to extend the 50% tariff deadline to July 9th, 2025. Experts suggest that one of the major roadblocks that face the EU is that they feel America is not making it clear exactly what they want, and they still do not know who is speaking for the President. EU Trade Commissioner Maros Sefcovic has spoken twice with U.S. Commerce Secretary with his statements adopting a more malleable tone, gone was the previous rhetoric of “we will defend our interest rates”.

After Trump’s announcement last Friday, the markets reacted with the usual predictability with the Nasdaq down 1%, the broader S%P 500 down 0.68%, the STOXX EUROPE 600 index down 0.68%, Germany’s Dax and France’s Cac 40 both ended the day down over 1.5%. The US Dollar took a beating again, down by as much as 0.8% on the Bloomberg Dollar Spot Index*, slumping to its lowest level since 2023. Experts suggest that the threat of punitive tariffs then removing that threat gives many investors and traders in the financial markets a lack of confidence in the Presidency translating to a lack of confidence in the greenback. Whilst many indexes recovered on Monday 26th May, the US Dollar continued its decline which not only included the slap happy way tariffs are doled out, but also Trump’s tax bill which is expected to add hundreds of billions to the federal deficit. Meanwhile data released from the Commodities Futures Trading Commission show hedge funds, asset managers and other speculative traders continued to bet against the US Dollar.

*Bloomberg Dollar Spot Index – This index is a benchmark that tracks the performance of the US Dollar against a basket of major global currencies. It’s designed to provide a

comprehensive view of the dollar’s strength by including currencies from both developed and emerging markets that are significant in international trade and liquidity.

A full-blown trade war between the EU and the United States is according to experts not in anyone’s interests. The repercussions to both protagonists’ economies would be negative and will undoubtedly have a downside effect on global trade as well. No matter what is currently being said, both the U.S. and the E.U. are miles apart in their negotiations, with President Trump having already rebuffed a trade deal from the E.U. last Thursday 22nd May. Despite improved rhetoric from both sides those close to the negotiations are fearful that come July 9th, 2025, a consensus may not have been reached.

United States and China Trading Update

Written by IntaCapital Swiss on May 21, 2025. Posted in News & Reports. Leave a Comment

Without a doubt, President Trump’s tariff war has severely disrupted trade between the two economic powerhouses, and nowhere else is this as dramatically highlighted as Apple’s iPhone and mobile devices, where shipments to the United States in April 2025 are down to levels not seen since 2011. Customs data revealed that Smartphone exports slid 72% or circa USD 700 Million in April, outpacing by a long way an overall drop in Chinese shipments to the U.S. of 21%.

Elsewhere in early May 2025, the busiest container hub in the United States, the Port of Los Angeles, saw a drop in shipments by circa 30% as the weight of Trump’s tariffs took their toll. Data released shows that retailers and importers were the most affected, especially those linked to China. Bilateral trade in 2024 between China and the U.S. was circa USD 690 Billion and investors feel that tariffs will significantly erode this figure.

Despite the temporary reprieve in tariffs between the two nations, data reveals that the trade war has left a deep unwelcome imprint on Chinese exporters with many looking to new markets away from the United States. Well known in the trade insurance arena, Allianz Trade having conducted a poll of Chinese exporters found 95% will or already are more determined than ever to double down on exporting their goods to non-U.S. markets.

China’s coastal city of Ningbo is host to China’s second largest port (Ningbo-Zhoushan Port) by cargo tonnage where local businesses, despite the de-escalation in tariffs still plan to reduce exports to the United States and “Go Global’. Senior experts and economists at the Economic Intelligence Unit confirmed this fact whilst also confirming Southeast Asia* remained the favoured destination among many businesses seeking to move production away from China.

*Southeast Asia – comprises eleven countries Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, Timor-Leste, and Vietnam. Note that many Chinese companies are somewhat wary of Vietnam with concerns over rising cost weighed against an attractive labour market. Indonesia appears to be the favoured destination.

Experts in the Sino – U.S. arena suggest that decoupling in the medium term seems to be the favoured outcome as Chinese exporters move away from the United States and American companies look to increase efforts to move production out of China with Apple already accelerating a shift in production to India. Apple was railed against by President Trump for not moving production back to the United States, experts close to the situation have said that scenario is unfeasible. The deal struck in Geneva between China and the United States brought tariff rates down to levels before the tit-for-tat tariff skirmish. But with time eating into the 90-day de-escalation agreement, the world will hold their breath whilst these two economic giants try and come to a sensible agreement.

Moody’s Downgrades the United States’ Sovereign Credit Rating

Written by IntaCapital Swiss on May 21, 2025. Posted in News & Reports. Leave a Comment

On Friday May 16th, 2025, the credit rating agency Moody’s downgraded the Unites States’ sovereign credit rating from Aaa (equivalent to AAA at Standard & Poor’s and Fitch) by one notch to Aa1 due to growing concerns over the nation’s USD 36 Trillion debt pile. Moody’s is the last of the three most important and recognisable rating agencies to downgrade the sovereign credit rating of the United States, with Fitch downgrading in 2023 and Standard and Poor’s downgrading in 2011. The United States has held a perfect credit rating from Moody’s since 1917, however the rating agency back in November when 2023 advised it might lower the U.S. credit rating when it changed its outlook from stable to negative.

The reaction from the White House was predictable, with spokesman Kush Desai saying, “If Moody’s had any credibility, they would not have stayed silent as the fiscal disaster of the past four years unfolded.” In another statement the White House advised that the administration was focused on fixing Biden’s mess. The White House communications director Steven Cheung also laid into Moody’s singling out their chief, Mark Zandi, who he said was a political opponent of President Trump, and is a Clinton donor and advisor to Obama. He went on to say, “nobody takes his analysis seriously and he has been proven wrong time and time again”.

Moody’s pointed out that in 2024, the government spending was higher than receipts by circa USD 1.8 Trillion, being the fifth year in a row where fiscal deficits have been above USD 1 Trillion. Debt interest has been growing year on year and eating into sizeable chunks of government revenue, with Moody’s pointing out that federal interest payments in 2021 absorbed 9% of revenue in 2021, 18% in 2024, and predict circa 30% by 2035. The GAO (Government Accountability Office), which is seen as an investigation arm of Congress has called the current situation unsustainable and went on to say that unless there is a change of policy debt held by the public will be double the size of the national economy by 2047.

After the announcement on Friday 16th, markets were unnerved on the following Monday morning, with stock markets recovering by the end of the day with experts confirming that markets had shrugged off the news, but some were advising that investors should be wary of complacency. However, some analysts advise the downgrade is a warning sign and may be the catalyst for profit taking after a huge run in the past month for equities. At the end of the day, United States Treasury Bonds are currently viewed by global investors as the safest investment in the world, and a downgrade by Moody’s is unlikely to stifle appetite for treasuries.

For most money managers and other global investors and market participants experts advise that the downgrade was probably seen coming for some time and lands in a market already wary of risks from tariffs and fiscal dysfunction. However, currently President Trump is pushing the Republican controlled Congress to pass a bill extending the 2017 tax cuts, a move some analysts predict will add many trillions to an already highly inflated government debt. However, hardline Republicans blocked the bill denuding deeper spending cuts. There was volatility in US Treasuries on Monday after the Moody’s announcement with 30-year treasuries breaking through the symbolic barrier of 5% (first time since October 2023) but slipped back to 4.937% by close of business. Experts suggest that the bond market had already priced in risk premium for government economic policy already in disarray, meaning Monday’s upward move in yields was just a knee-jerk reaction.

Despite the Recent Rebound, Will Investors in the Long-Term Continue to Dump Dollar Assets?

Written by IntaCapital Swiss on May 14, 2025. Posted in News & Reports. Leave a Comment

Although recent losses in US stocks have almost been wiped out, market experts believe that institutions such as pension funds and institutional money managers could in the long-term cut back on their massive exposure to US Dollar investments. Some investment bankers close to the action of certain money managers with trillions of dollars in U.S. Dollar asset exposure have started to cut back on these positions, mainly due to the fall out on the tariff war, flip flopping on policy, and Donald Trump’s continued attacks on the Chairman of the Federal Reserve, Jerome Powell.

Expert analysts advise that logically Europe is the current destination for the flight of capital from the United States, due to growth in the European economy being led by German spending in the defence sector and mixture of relatively cheap equity markets. Recently released data shows that in March 2025, the largest cut in history to U.S. equity allocations* with the shift out of the economy of the United States and into Europe was the sharpest since 1999. Further data released showed that in April 2025, outflows from ETFs (Exchange Traded Funds) domiciled in Europe that invest in U.S. debt and equities reached Euros 2.5 Billion, a level not reached since 2023.

*US equity allocation – refers to the portion of an investment portfolio dedicated to stocks of companies listed on U.S. stock exchanges. It’s a key component of overall asset allocation, which involves distributing investments across different asset classes like stocks, bonds, and real estate.

Although there have been recent gains by the US Dollar, overall, it is down 7% in 2025, with some institutions reporting spot transactions where institutional investors have sold the US Dollar and bought Euros on a sustained basis. One highly qualified and senior macro strategist in Europe announced that “If European pension funds were to reduce their allocations to 2015 levels, that would be equivalent to selling Euros 300 Billion in U.S. denominated assets. Some European pension funds have already started to trim their U.S. holdings position with Danish pension funds in Q1 2025 selling U.S. equities for the first time since 2023 and in the quarter Finland’s Veritas Pension Insurance Co reduced their exposure to U.S. equities.

Investors, analysts, economists etc, all talk about the cyclical effects in the various financial and commodity markets. What goes up must come down and vice versa. Remember the Global Financial Crisis of 2007-9 where liquidity completely dried up, banks were not lending to each other, investment bank(s) going bankrupt, bail outs of some of the largest financial institutions? Several years later everything it seemed was back to normal with the longest run of low interest rates seen for decades.

The point is whilst the United States is seeing massive outflows of capital in a reversal of the long-term trend where inflows were the order of the day where capital was attracted liquidity, market performance and economic growth. Some analysts advise that the current trend will only go so far given the liquidity and depth of the U.S. stock market and the circa USD 30 Trillion US Government Bond/Treasury market. Analysts report that many investors are sitting on the side lines wary of betting against the economy of the United States and its prospects for long-term growth.

United States and China Agree 90-Day Trade Deal

Written by IntaCapital Swiss on May 14, 2025. Posted in News & Reports. Leave a Comment

On Monday 11th May 2025, both China and the United States agreed to de-escalate their trade war with each other by announcing a 90-day pause on tariffs. The United States agreed to cut tariffs on Chinese goods from 145% to 30% and China agreed to cut tariffs on American goods from 125% to 10%. After the agreement was announced in Geneva, the U.S. Treasury Secretary said, “neither side wanted a decoupling and we do want trade, we want more balanced trade, and I think that both sides are committed to achieving that”. In a joint statement it was announced it had been agreed “to establish a mechanism to continue discussions about economic and trade relations. These discussions may be conducted alternately in China and the United States or a third country upon agreement of the Parties”.

A spokesperson for the Chinese Commerce Ministry said of the joint statement, “it is an important step by both sides to resolve differences through equal-footing dialogue and consultation, laying the groundwork and creating conditions for further bridging gaps and deepening cooperation”. This is a surprising outcome and took markets by surprise as before the Chinese had taken a hard-nosed stance demanding that the United States remove ALL tariffs on China before agreeing to come to the negotiating table. However, several analysts have pointed to the fact that this is just a 90-day ceasefire and pointed out this may not be a lasting peace between the two countries.

Global stock markets rallied on news of the China/United States trade agreement, with the S&P 500 and Nasdaq futures rising 2.7% and 3.7% respectively, plus the US Dollar rose 1% against a basket of currencies. Elsewhere, gold retreated by 2.8% as investors negatively impacted safe haven assets and Brent crude oil futures gained 2.8% rising to $65.71pb. In Europe, both France’s CAC 40 and Germany’s DAX both up just under 1%, Europe’s STOXX 60 and STOXX 600 rose 1.9% and 1% respectively and London’s FTSE 100 only rose by circa 0.50%. In Asia, both China and Hong Kong’s benchmark indices rose, with China’s CSI 300 rising 0.6% and Hong Kong’s Hang Seng index rising 0.8%.

Sadly, there are no guarantees that come 90 days, talks will have progressed further with further positive steps being announced between the two countries. Experts advise that many investors remain wary of the United States due to the flip flop policies of the Trump2 administration, plus President Donald Trump’s continued attacks on the Chairman of the Federal Reserve, Jerome Powell. Analysts advise that some institutions are acting like the risks have disappeared. If this is true, they must have been asleep since inauguration day, as many of their peers seem to be adopting a wait and see attitude. Analysts advise that in the past four weeks investors pulled $24.8 billion from U.S. stocks and with huge U.S. conglomerates such as Mattel Inc, United Parcel Service Inc and the Ford Motor Co recently withdrawing earnings guidance due to supply chain and tariff uncertainty being now extremely hard to navigate, there may be more unwanted surprises around the corner.

United States Federal Reserve Holds Interest Rates

Written by IntaCapital Swiss on May 7, 2025. Posted in News & Reports, Uncategorized. Leave a Comment

In the weeks leading up to today’s interest rate announcement by the FOMC (Federal Reserve Open Market Committee), President Donald Trump has viciously attacked the Chairman of the Federal Reserve, Jerome Powell. In one damning statement the President said on his social media post to “cut rates pre-emptively to help boost the economy,” saying Powell had been “consistently too slow to respond to economic developments”.

President Trump also wrote “There can be no slowing of the economy unless Mr Too Late, a major loser, lowers interest rates now”. This criticism (he has also threatened to replace Chairman Powell) came after Powell’s warning that Trump’s import taxes were likely to drive up prices and slow the economy. Below, the vote on interest rates by the FOMC reflects Chairman Powell’s and the Federal Reserve’s commitment to that warning.

Today the FOMC voted unanimously to hold its key benchmark interest rate at 4.25% – 4.50% where it has remained since December 2024. Confirming the decision, Federal Reserve Chairman Jerome Powell said that officials were not in a hurry to adjust interest rates adding that tariffs could lead to higher inflation and unemployment. Chairman Powell went on to say, “If the large increase in tariffs are sustained, they are likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment”.

Experts suggest that the unpredictability of President Trump and his back and forth on tariffs makes it very difficult for the Federal Reserve to predict the future of the economy. However, the statements coming out of the Federal Reserve confirmed that currently the economy is resilient with improving job gains and the economy growing at a solid pace. At the same time, analysts suggest that the Federal Reserve is in a holding pattern as it waits for uncertainty to clear.

Several analysts and experts have said that the Federal Reserve’s monetary policy direction depends on how the risks develop on inflation or jobs, or in a more difficult scenario whether unemployment and inflation risks increase together. If both increase together, the Federal Reserve will have to choose which direction to take monetary policy as a weaker job market calls for rate cuts and higher inflation would call for a tightening of monetary policy.

In his post-statement comments Chairman Powell also added that inflation ignited by tariffs could be short-lived or long-lasting depending on how high tariffs go. Just before the FOMC released their interest rate statement President Trump indicated that he would not back down on the current duties of 145% imposed upon China. The wait and see element of Federal Reserve policy is here to stay for a while with some financial analysts suggesting a cut of 0.25% in interest rates will come in July 2025.

Are Critical Minerals China’s Trump Card?

Written by IntaCapital Swiss on April 30, 2025. Posted in News & Reports, Uncategorized. Leave a Comment

Among the many things coveted by President Donald Trump, experts suggest “Critical Minerals”* are somewhere very near the top of the list. The reason why critical minerals are so important is that they are essential in many products such as electric car vehicles, military hardware, iPhones, clean energy, and semi-conductors, to mention but a few. There is a sub-sector or subset of Critical Minerals known as REEs** (Rare Earth Elements) and both play a crucial role in various technologies.

*Critical Minerals – These are a broad group of minerals considered essential and deemed vital for national and economic security. They are deemed critical due to their importance in modern technologies including defence and energy sectors, and all major industries, but are vulnerable to supply chain disruption. Examples of critical minerals are copper, lithium, nickel, cobalt, graphite, silicon, tungsten, platinum group metals and rare earth elements.

** REEs / Rare Earth Elements – Often confused with Critical Minerals, this subset makes up a highly specific category within the critical mineral family and are made up of 15 elements in lanthanide series within the periodic table plus two who are outside the periodic table. These elements are known for their unique magnetic, catalytic, and other properties. The word rare is confusing because these elements are not so rare in the earth’s crust but found in relatively low concentration. China currently dominates the market in Rare Earth Elements.

When President Trump had finished slapping China with increase after increase in punitive tariffs, one of the responses from Beijing was to introduce controls in exports on certain elements in the Rare Earth Element category. Indeed, the Rare Earth Elements chosen by the Chinese government could be very disruptive to the United States as it is designed to have maximum impact on the American military-industrial complex. Currently, China has the greatest global control over supply of these elements and is being used as a negotiating tactic as the US/SINO trade war escalates.

Many experts are now saying that some of the tariffs introduced by President Trump are self-defeating, and this scenario is playing out in the critical mineral and rare earth element arena. China is recognised as far and away the major player within this sector, but it has an even bigger grip on the refining and processing of these minerals/elements (aka the mid-stream) rather than just the mining. Indeed, recent data released by the US Geological Survey showed that China led production in 33 of 44 critical minerals, and figures show that in 2023 China mined in excess of 75% of the world’s graphite which is the main element used in the anodes of batteries.

Whilst the western world and the United States sat back and did nothing, China has spent many years building up their dominance in the critical mineral market, not only through domestic availability (including processing) but by investing in infrastructure in overseas destinations, in return for securing supplies of minerals. Experts suggest that it will take years for the United States to build up critical mineral infrastructure in order to bypass China’s current hold in the marketplace, so to this end could Beijing hold the Trump Card in trade negotiations with the United States.

Are Tariffs Negatively Impacting America’s AI and Semi-Conductor Ambitions?

Written by IntaCapital Swiss on April 30, 2025. Posted in News & Reports. Leave a Comment

President Donald Trump has made his desire public for U.S. global dominance in the AI and Semi-Conductor (chips) markets; however experts suggest that his tariffs will hinder domestic chip production and put a stop to his ambitions of dominating the worldwide AI market. They are portraying the escalation in tariffs which will perhaps end in an all-out trade war will dramatically increase costs in American data centres and the building of semi-conductor fabrication plants, with some analysts predicting that tariffs will become the single largest barrier to supremacy in the A1 arena.

Tech experts and industry leaders suggest tariffs will inevitably hit global supply chains, thus negatively impacting and disrupting medium to very large AI computing projects. This will be a blow to major tech companies such as Meta, Google, and Amazon who between them have pledged just for 2025, USD 300 Billion on computing infrastructure which will underpin AI projects. Furthermore, TSMC (Taiwan Semiconductor Manufacturing Company Ltd) has already committed USD 100 Billion to increase the capacity of chip production in the U.S. which will underpin the above-mentioned AI ambitions.

Potential supply chain issues are at the top of the agenda for many big tech executives, with one executive currently attached to a USD 500 Billion data centre enunciating that the delay of one single component could affect the whole project as the supplier is making business decisions brought on by tariffs. One only has to look at other industries like the European Wine Sector where shipments may be halted because impending tariffs are stopping suppliers putting a price on future orders. Elsewhere in the steel pipe manufacturing arena, tariffs on Chinese built ships/bulk carriers effect on supply chains can be located in Germany where port workers should be loading a first round 16,000 MT of steel piping bound for a huge Louisiana energy project, however due to the proposed levies, the cargo is now sitting gathering dust in a German warehouse.

In the GPU (Graphics Processing Unit)* market, Nvidia’s most advanced model is utilised Microsoft and Amazon in their cloud service providers platform, however these GPUs arrive in the United States as racks of servers or just a single rack which have been assembled in a number of different countries according to data released by Z2Data (supply chain data analysis platform). This is where the economics get blurred because although GPUs have been exempt from tariffs, the many components which make the GPU have not been exempt. Experts suggest that importers in the U.S. will be hit with huge costs as component and product categories are massive and it is suggested that even the smallest component can bring the supply chain to a halt.

*Graphics Processing Unit – is a specialised electronic circuit designed to accelerate computer graphics and image processing. The GPU is essential for AI, particularly for tasks like training deep learning models and handling complex computations. Their parallel processing capabilities and high memory bandwidth allow AI to significantly accelerate their workloads.

Experts are saying that even if chips were produced in the United States, they would be more expensive to produce despite the 32% proposed tariff on chips produced by Taiwan’s TSMC, as tariffs would push up prices on all key tools and materials. They went on to say the biggest loser would be American producers of chips, as despite tariffs it will still be cheaper to factories and manufacturing capacity outside the United States, dashing Trump’s dream of domestic chip manufacturing. This is a catch 22 situation for President Trump, for once he cannot have it both ways having his cake and eating it, and analysts wait to see how he will solve this particular conundrum.

Confidence in U.S. Government Bonds Can No Longer be Taken for Granted

Written by IntaCapital Swiss on April 16, 2025. Posted in News & Reports. Leave a Comment

Amongst the financial carnage inflicted on the global markets by the introduction of punitive tariffs by President Donald Trump, global investors have been fleeing to safe haven assets, which for the first time in living memory does not include Treasuries or U.S. Government Bonds. Treasury bonds have had a tradition of being first in line for investors during adverse conditions which was true during the Global Financial Crisis, on 9/11, and even when the United States’ credit rating was cut, where Treasuries were seen to rally.

However, in today’s markets, and as Donald Trump has declared war on global trade, US Treasuries are now being questioned as the world’s best safe haven as can be seen in their surging yields*. Many experts and analysts agree that US Government Bonds and the US Dollar (which has in recent days plunged), rely on the world’s confidence in the financial and political systems of the United States in order to get their strength.

*Treasury Yields – Yields and Treasury prices have an inverse relationship as when Treasury prices rise yields fall and vice versa. Therefore when investors sell treasuries the yield rises and when they buy the yield falls.

The faith in the systems of the United States is now being tested as Thursday saw foreign investors en masse retreating for US assets with equities, treasuries, and the USD Dollar all falling together. The US Dollar fell against the Swiss Franc and the Euro by the most in 10 years, whilst 30-year Treasury yields headed north to 4.87% surging by 13 basis points. The point here is that when investors in the United States and from global markets sell off stocks, they usually find safety in U.S. Government bonds, so following the stock market route yields on treasuries rose, which is totally the opposite of trends in the near and distant past.

Economists have noted that the problems in the U.S. Government Bond market will have deep implications for the global financial system, because as Treasuries are (or were) regarded as “Risk Free Asset” they are utilised as a benchmark determining the price of stocks, mortgage rates, sovereign bonds, nearly everything including collateral for intra-day lending in the amount of trillions of US Dollars. US assets in general now appear to be being repriced as sentiment towards the U.S. as a safe haven diminishes.

There are however some dissenting voices who have concluded not everyone is losing faith in the United States’ political and financial systems. Indeed, some experts expound that long-end Treasury sell-offs are due to technical factors such as hedge funds unwinding leverage trades, with Treasury Secretary Scott Bessent backing these views. There was even an auction of USD 22 Billion 30-year bonds on Thursday with investors, despite tariff driven volatility, showing solid demand as they did for the sale of 10-year bonds on Wednesday.

However, whatever views are held it is generally believed by experts that a message has been delivered to The White House that confidence in U.S. Government bonds can no longer be taken for granted. The lack of clarity in this administration’s policies together with their President antagonising allies and enemies alike, including their largest creditors, through his determination to rewrite the financial and trading global rules, will in the eyes of many see the rest of the world in the long run look elsewhere for safe haven assets.

China Retaliate with the Imposition of 125% Tariffs on all U.S. Imports

Written by IntaCapital Swiss on April 16, 2025. Posted in News & Reports. Leave a Comment

So the all-out trade war escalates between the United States and China as Beijing announces retaliatory tariffs of 125% (up from 84%) as Donald Trump confirmed that tariffs on China are now effectively 145%. Officials in China confirmed that the 125% tariff will remain no matter if the White House decides to increase tariffs as the levies are now so high there is no longer a market for goods in China imported from the United States.

Chinese experts in this arena have advised that there is no sign from officials from either the United States or China that their respective governments would start negotiations which would avoid a negative impact on global supply chains. However, one official from China’s Commerce Ministry was quoted as saying, “Beijing is open to negotiate with the United States on an equal footing”.

Once again Treasury Secretary Scott Bessent was on the offensive saying, “It’s unfortunate that the Chinese actually don’t want to come and negotiate, because they are the worst offenders in the international trading system”. He went on to say, “They have the most imbalanced economy in the history of the modern world, and I can tell you this escalation is a loser for them”.

Analysts suggest that due to the drag from U.S. trade tensions and slower global growth, China’s GDP (Gross Domestic Product) for this year will be 4%. They further advised that exports from China to the United States only accounted for circa 3% of GDP, however there is a possible negative impact on employment with circa 10–20 million Chinese workers involved with exports to America.

Elsewhere the previous U.S. Treasury Secretary under President Biden has unleashed nothing less than a massive broadside against President Trump and his economic policies, saying, “President Trump has taken a wrecking ball to the U.S. economy”. She commented that Trump and his officials have declared that they had inherited an economy in a “state of calamity and catastrophe”. However, Yellen noted the Economist back in October 2024 said the U.S. economy was the envy of the world.

As already advised previously on this website, U.S. tariffs may well drive other countries including those in the western world further into the arms of China. China is already Europe’s largest trading partner and at a meeting today between Chinese President Xi Jinping and Spanish Prime Minister Pedro Sanchez, Xi said that China and the EU (European Union) must join together in defending globalisation and oppose unilateral acts of bullying. Already the Spanish Agricultural Minister has said, “Spain will pursue closer trade ties with China in the interest of its citizens”.

As Democrats and some Republicans, along with leaders and officials of trading partners with the U.S,. a timely reminder is that the U.S. trading deficit with other countries amounted to USD 130.7 Billion in January 2025 and USD 122.7 Billion in February 2025, and many economists have voiced their wonder about how previous administrations and congress were so happy with this situation.

Obviously Donald Trump is not and has the bit between his teeth but perhaps there was a better way of rebalancing the deficit away from using tariffs. Only time will tell, but the U-turn on tariffs (10% across the board apart from China) giving a 90-day pause, is perhaps part of his intended policy (as confirmed by U.S. Commerce Secretary Howard Lutnick) bringing trading counties to the negotiating table.

Tag: United States