- U.S. threatens 245% tariffs on China, escalating trade tensions.
- Gold surges, stocks fall, Bitcoin stays steady.
- Trump targets China and allies, drawing China’s backlash.
Global financial markets have been shaken by the White House’s new tariff threat, which could raise the pace of its ramp-up since January to a staggering 245%. The president has rekindled fears that a troubling trade war is getting deeper by making this move.
Allies Also Hit by U.S. Trade Measures
This comes after U.S. President Donald Trump returned to the political stage and focused on his new hardline trade policy against China. Ever since mid-January, it has been marked not only by aggressive tariff implementation against rivals but also against longstanding allies. Targets have been laid on Canada, Mexico, and the European Union, while China is still the focus.
Trump’s focus on China became clearer last week when he paused tariffs on countries other than China and hinted at his administration’s primary target. Experts widely interpreted the move as a cunning attempt to cut Beijing off effectively and use tariffs as leverage on other countries.
The impacts of what could become the latest twist in this tit for tat, charge for charge dispute are being felt in the U.S., where the current tariffs on Chinese goods stand at 145%, and should China press a retaliatory trade measure, those could jump as high as 245%. It followed Trump’s authorization to formally investigate the national security threats created by the import dependency of America’s critical minerals and similar items.
These imports include strategic materials like lithium, nickel, cobalt, and rare earth elements, which are critical for manufacturing military equipment, batteries, and smartphones.
China’s government has strongly opposed the U.S. trade action despite reporting stronger-than-expected economic growth in the first quarter. Deputy Commissioner of China Statistics Bureau Sheng Laiyun was sharply critical of the Trump administration’s position, calling it ‘trade bullying,’ which goes against the World Trade Organization (WTO) regulations and international law. He warned that such measures would hurt the country’s domestic output and the world economy.
Financial Markets React with Volatility
Global financial markets moved swiftly and sharply, as has been the case during previous episodes of heightened U.S.-China tensions. Once again, the investor caution provided gold with the primary beneficiary, with its price against the US dollar soaring to an all-time high of over $3,300 per ounce. Since the beginning of the year, the precious metal has advanced 25 percent, putting 2025 one of its best years of the last decade.
However, U.S. equities plummeted almost immediately, and futures related to major indices took a sharp fall after the news. The Dow Jones Industrial Average fell 1%, the S&P 500 also lost 1.4%, and the tech-heavy Nasdaq Composite sank 2.2%.
It is interesting to note that Bitcoin’s price was largely unaffected by the announcement. Previously, the cryptocurrency went from $86,500 to $83,000 before the warning of the tariff. Since then, BTC has been reasonably stable, trading around 84,000 BTC ($84,000) and possibly pricing that in geopolitical risks or from an inability to view this as a risk.
