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US President Donald Trump attends a Cabinet meeting at the White House in Washington, D.C., on April 10, 2025.
China strikes back at the US with massive tariffs of its own
Wednesday’s tariff respite is firmly in the rearview mirror, as China announced on Friday it was raising its duty on US imports to an astronomical 125%, taking effect Saturday. The announcement came less than 24 hours after the White House clarified that the new levy on Chinese imports would be 145%.
With US President Donald Trump’s collision course with the rest of the world on hold — the EU delayed its planned retaliatory levies Thursday — his fully-fledged trade war with China now has the spotlight to itself. Whereas he dropped tariffs on other countries on Wednesday, the commander-in-chief raised them on Beijing three times within one week, with the White House clarifying on Thursday that the rate is now 145%. After a brief delay, China has now responded in kind.
And just like that. These extraordinary levies are already affecting businesses. US firms have started canceling orders and some Chinese companies are putting staff on temporary leave. Trans-pacific shipping bookings have plunged. The March inflation figures released Thursday suggested that US price growth was easing, but the data was taken before the new China tariffs were implemented. With the levies accelerating skyward, it’s only a matter of time before US prices follow suit.
Markets suffer again. The laws of gravity applied to the markets Thursday — before China announced its latest retaliation — with stocks reversing again as the reality of Trump’s new world trade order set in for investors. The S&P 500 dropped 3.5%, the Dow Jones Industrial Average fell 1,000 points, and the dollar lost ground against the major Asian currencies. On top of all this, Democrats are now questioning whether the president and his allies engaged in insider trading this week. Wednesday’s comeback looks like a fever dream.
The dust won’t settle. Trump acknowledged Thursday that there would be “transition problems” with the markets, while retaining his unfailing optimism that stock would turn around. The former “Apprentice” star added that he was open to extending the 90-day tariff pause on countries that aren’t China, but with Beijing further escalating the trade war, investors will remain unsettled.
Demonstrators rally against President Donald Trump and his adviser Elon Musk during a Hands Off! protest on the Washington Monument grounds in Washington, DC, on April 5, 2025.
Trump’s tariffs trigger aftershocks at home and abroad
US President Donald Trump’s “Liberation Day” tariffs have been met with anger, outrage, and disbelief in every corner of the world – including islands inhabited solely by penguins. At last count, at least 50 countries want to talk trade with Washington, while in the US, opposition to Trump’s presidency is getting organized. Here’s a look at this weekend’s reactions.
In America: Protests, pleas, and pride
From San Francisco to Tulsa to DC, protesters took to the streets on Saturday in over 1,400 demonstrations across all 50 states, demanding that Trump and his “billionaire friends” take their “Hands Off” programs like Medicare and Social Security. While the protests were not specifically aimed at the tariffs, many demonstrators denounced their impact on consumers and retirees, who feared for the future of their investments in the wake of tariff-induced market turmoil.
Meanwhile, top tech and finance leaders — including reps from Apple, Goldman Sachs, and Meta — reportedly plan to fly to Mar-a-Lago to urge Trump to reconsider his tariff plans. Their message: Tariffs are tanking investor confidence and threatening America’s innovation edge.
In the Midwest, it’s a different story. In Iowa, Ohio, and the Dakotas, many in Trump’s base are cheering. Farmers, small manufacturers, and assembly line workers, angry at the impact of offshoring, say the tariffs finally put America first. As a candy store manager in small-town Ohio told the BBC, “If tariffs bring companies and business back to hardworking American people like the ones who live here, then it’s worth it.”
Overseas: Calls for unity, calculated countermeasures
Abroad, in the words of UK Prime Minister Keir Starmer, the consensus is that “the world as we knew it has gone.” The EU is promising a coordinated response in the coming days with retaliatory tariffs on a host of American goods, including diamonds, meat, cereals, wine, wood, clothing, chewing gum, dental floss, vacuum cleaners, and toilet paper. (In a curious twist, Trump adviser Elon Musk suggested on Saturday to a far-right Italian party that the US and Europe form a zero-tariff free trade zone, saying that this “has certainly been my advice to the president.” We’ll see whether Trump takes it.)
In Asia, responses have been mixed. Indonesia and Taiwan’s governments have opted not to retaliate, while Vietnam’s President To Lam has already been on the phone with Trump, proposing a deal to eliminate tariffs entirely between the two nations. In contrast, China is digging in its heels, placing export restrictions on rare earths in addition to reciprocal tariffs of 34% on US goods. Both measures were announced on Friday after two days of stock market meltdowns, which continued into Monday, as the Nikkei plunged 7.8%, while two other Asian indexes had record losses for a single day. Wall Street is also set for another week of turmoil after Dow Jones futures fell 1,500 points (over 3.5%) late Sunday.
Responding to the continued market downturn, Trump said Sunday night that “sometimes you have to take medicine to fix something.”
President Donald Trump holds a "Foreign Trade Barriers" document as he delivers remarks on tariffs in the Rose Garden at the White House on April 2, 2025.
Trump’s tariffs spark market chaos, risk political backlash
Donald Trump’s much-anticipated “liberation day” tariff announcement on Wednesday is the biggest disruption to global trade in decades, so the political, diplomatic, and economic impacts will take time to become clear.
In a dramatic unveiling in the Rose Garden, Trump set in place tariffs of at least 10% on most US trading partners, which set off a global sell-off of stocks, a rebellion from some Republicans, and angry rebukes from shocked trading partners.
It is hard to game out what will happen next because it has been so long since a shock on this scale hit the global tradition system. “We’re literally going back 100 years for historical precedents, and I’m not sure that there is an economic precedent of a policy-driven change of this magnitude in this direction,” says Eurasia Group senior analyst Graeme Thompson.
Trump’s new policy will make it more expensive for Americans to buy products from most countries, which investors fear will lead to a dramatic global economic slowdown and drive up inflation. Trump’s stated goal for the new policy is to stop foreign countries from taking advantage of the United States and boost American manufacturing, but observers and analysts are almost universally united in skepticism around the “golden age” that he promises they will bring.
Because the results are hitting investors and will soon hit the pocketbooks of consumers, there will be growing pressure on Republicans in the House and Senate to force Trump to change course. Until now, Trump’s popularity with his electoral base has kept them in line, but this new policy may put that under strain. Four senators voted with the Democrats in a (likely only symbolic) vote against Canadian tariffs late Wednesday, an acknowledgment that Republicans could face political blowback in the midterms for these widespread duties.
The political reaction is taking place before other countries have even put in place retaliatory measures, which can be expected to damage American exports. The greatest downside is unpredictability.
“I think what is hitting investors globally at this point is that uncertainty,” says Thompson.
“If you just came in and said, very clearly, ‘This is what’s happening, end of story,’ I think a lot of companies wouldn’t be happy, but they could work with it, but that’s not the story that we’ve got right now.”
It’s hard to see anything positive in the reactions from markets in the short term, and the political and diplomatic reaction in the United States and abroad is likely to test the strength of Trump’s support.
Portugal's Prime Minister Luis Montenegro looks on during the confidence motion at the parliament in Lisbon, Portugal, on March 11, 2025.
Hard Numbers: Portugal will likely vote (again), US markets swoon, A breath of fresh air, Baloch militants seize train, Trump trumpets Tesla
3/4: Portugal’s parliament has voted no-confidence in Prime Minister Luis Montenegro over a planned parliamentary inquiry into his business dealings. The result: Portugal will probably hold its third election in less than four years. A poll published this week found the opposition Socialists with a small lead over the governing center-right party.
214: On Tuesday, armed insurgents, acting on behalf of a separatist group in Pakistan’s Balochistan province, attacked and boarded a packed passenger train near Quetta. The militants claimed they were holding 214 passengers hostage. But local police said the majority of the passengers were believed to be safe and that 35 had been taken hostage.
4 trillion: From its peak in February, a US stock market sell-off has wiped out $4 trillion from the S&P 500. Many economists blame the meltdown on the potential inflationary impact of President Donald Trump’s growing number of tariff threat
7: Only seven countries – Australia, New Zealand, the Bahamas, Barbados, Grenada, Estonia, and Iceland – met World Health Organization air quality standards last year, data showed on Tuesday. The smoggiest five were the Democratic Republic of Congo, Pakistan, Bangladesh, Chad, and India.
50: On Monday, shares in the Elon Musk-owned electric vehicle maker Tesla were down more than 15% for the day and more than 50% from their peak three months ago. Shares recovered a bit on Tuesday, closing up 3.8%. Analysts place much of the blame for the losses on investors spooked by anti-Musk Tesla boycotts. In response, President Donald Trump pledged on Monday that he would buy a “brand new Tesla,” despite his past criticism of electric vehicles.
Staff remove bottles of US alcohol from the shelves of a Liquor Control Board of Ontario store as part of retaliatory moves against tariffs announced by President Donald Trump, in Toronto, Canada, on March 4, 2025.
Canada, Mexico, and China retaliate against Trump’s tariffs
It’s official: The United States is now waging a full-blown trade war against three of its largest trading partners. On Tuesday, Washington imposed tariffs of 10% on energy and 25% on all goods imported from Canada and Mexico and doubled its existing tariffs on Chinese imports from 10 to 20%. All three countries responded with harsh words and retaliatory measures.
Canada imposed an immediate 25% retaliatory tariff on $30 billion worth of US goods, with an additional $125 billion worth of products to be tariffed in 21 days. Provincial liquor stores removed American alcohol and Ontario Premier Doug Ford ripped up a $100 million contract with Elon Musk’s Starlink. Ford alsothreatened a 25% retaliatory tariff on electricity exports. Canadian Prime Minister Justin Trudeau called the tariffs “dumb,” prompting US President Donald Trump to repeat his taunt of “Governor Trudeau” and promiseeven higher tariffs in response to retaliatory efforts.
Mexico’s President Claudia Sheinbaum took a slower approach. “We have said it in different ways: cooperation and coordination, yes; subordination and interventionism, no,” she said. Sheinbaum plans to speak with Trump by phone on Thursday and will announce retaliatory measures on Sunday if no deal is reached.
China, meanwhile, placed an additional 10% to 15% tariffs on imported US goods, including chicken, wheat, soybeans, and beef as of March 10. Beijing says it will “fight to the bitter end of any trade war” but left the door open for talks, advising the US to “return to the right track of dialogue and cooperation before it is too late.”
The tariff war had immediate economic effects.Markets plunged, the price of a Dodge Ram truck reportedly rose from $80,000 to $100,000, and by mid-March American gas prices could rise by as much as40 cents per gallon, while Ford said the auto manufacturing sector in Canada could shut down.
Could Trump change course? We’ll be watching for further market volatility as well as blowback from consumers, businesses, and politicians. But stay tuned for a possible course correction: US Commerce Secretary Howard Lutnick already hinted Tuesday that Trump is considering “relief for USMCA-compliant goods” and “may roll back Canada and Mexico tariffs tomorrow.”
US inflation slows a bit
The Graphic Truth: US inflation slows a bit, but ...
The US inflation rate for August was released on Tuesday and the figures are sure to cause anxiety in the White House. Overall, the consumer price index, which measures a range of consumer prices, rose 8.3% from the same time last year – 0.2% more than many economists anticipated – though it’s down from 8.5% in July and 9.1% in June.
Indeed, the latest findings surprised many analysts who predicted that the drop in US gas prices in recent months – down from $5 a gallon in June to a current national average of $3.70 – is a sign that the economy is cooling across the board.
But that doesn’t seem to be the case. The ongoing war in Ukraine and related global supply chain issues have meant that food and energy prices remain sky-high. The US Department of Labor’s food index rose a whopping 11.4% in August year-on-year, up 0.8% since July – marking the largest increase since Sony introduced the walkman.
While Americans opting for alternative transportation (carpooling, public transport) may be contributing to weaker demand and lower gas prices, families have fewer options when it comes to food consumption. Even prices of no-frills staples like flour, butter, and potatoes are still on the rise.
What’s more, core inflation – which excludes notoriously volatile food and energy prices – continues to surge, suggesting that Americans are still grappling with too-high prices for commodities like medications, furniture, and new cars. Meanwhile, energy markets remain volatile as European efforts to ditch Russian natural gas have caused shortages and price shocks around the globe.
The CPI report shocked the markets, sending the Dow down nearly 1,300 points amid concern that the US Federal Reserve would continue to raise interest rates in order to cool the economy, resulting in investors pulling money from the markets. The Fed will hold its monthly policy meeting next week, and it is expected to again raise rates by 0.75 points, which would be its third three-quarter point hike in recent months.
Federal Reserve Chair Jerome Powell said in a keynote address last month that efforts to curb inflation would not be painless. He explained that the Fed would continue with its aggressive strategy despite fears that too much belt-tightening could lead to mass layoffs and recession.
Inflation has thwarted the US’ post-pandemic recovery for months and fueled President Joe Biden’s tanking poll numbers ahead of midterm elections this November. Things were starting to look a little better for the Democrats in recent weeks after Biden enjoyed several legislative successes. But more bad economic news could be a boon for Republicans who already have the strategic advantage of not belonging to the same party as the incumbent president.- Podcast: Inflation nation: How Larry Summers predicted skyrocketing prices in the US - GZERO Media ›
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Retail investors playing key role in driving market volume
Betty Liu, Executive Vice Chairman for NYSE Group, provides her perspective:
What's been the role of the retail investor over the past few months?
So, US equity market volumes have been pretty high, remarkably high since the end of February 2020, and much of that is being attributed to the rise in retail investment activity. In fact, on peak market days, retail investors can account for up to a quarter of all market activity.
Is this the case for the options market as well?
So, absolutely. In fact, the options market has seen a spike in individual investment activity. That has driven volumes to record highs. So, eight of the top ten multi list options volume days have occurred in the first six months of 2020. So, pretty remarkable indeed.
Why more companies are going public now
Betty Liu, Executive Vice Chairman for NYSE Group, provides her perspective:
Over the past few weeks, more companies have been going public. Why is that?
Well, as you might recall, back in March, when we first saw the pandemic erupt, the markets were extremely volatile. And in fact, we triggered the market wide circuit breakers a total of four times between March 9th to 18th. At that time, you had some companies tap the capital markets to raise funds for short term funding needs, but there weren't a lot of IPOs. Now the markets are a little bit more calm, so to speak, and that means that the IPO window is opening. You've seen companies like Albertson's, Dun & Bradstreet and Lemonade go public in just the last few weeks.
What is the IPO window?
So, some analysts refer to this as the open window when private companies can tap the capital markets and go public. So, this window is usually at a time when the market conditions are more conducive to a company raising funds and going public. And that is exactly what is happening right now.