Here’s what happened this week as the United States and China continue to further escalate their trade war beyond all recognition. Since President Trump first announced a new 50% tariff on every import from China. The latest increase will raise Chinese tariffs to a total of 104% – the highest ever in history as of April 9th. In retort, Beijing’s Commerce Ministry announced that in response to this latest increase, China would never accept said increase. They promised to do more and to stand firm against U.S. pressure.
The latest announcement from the Commerce Ministry is a testament to China’s hard-line position amid intensifying bilateral trade conflicts. Officials have stated, “If the U.S. insists on its way, China will fight to the end,” signaling a potential for continued conflict between the two economic superpowers. Beijing’s defiance comes as it prepares for further retaliatory measures, having already imposed a 34% levy on U.S. goods in response to last week’s tariff escalation.
As this trade war continues to escalate, the market reaction has already started making itself felt. The U.S. Dollar has begun to recover as traders adjust their positions ahead of the anticipated release of the Fed Minutes. Investors are heeding warnings over the potential impact of the trade war on U.S. economic growth prospects. Even with their worries, there is indeed recovery occurring. In the European session on Wednesday, the EUR/USD exchange rate is surging toward 1.1000. This movement serves as a stark reminder of how volatile currency values can be during times of great uncertainty.
The U.S. Dollar is enjoying a bit of a renaissance. Fears remain over what rising tariffs will do to the overall economic health of the United States. USD buyers are being a little more cautious, knowing that the effects of higher tariffs would worsen already-simmering economic troubles.
Producers are anxiously anticipating the next wave of tariff updates. They’re no doubt keeping a close eye on the upcoming release of the Fed Minutes for clues that could shift the current market paradigm. Tensions are reaching new heights between Washington and Beijing. This interesting, yet contentious fight has potentially far-reaching consequences for international trade.