Dawn of Global Trade War
The global trade war has sparked concerns about a recession, with the IMF warning of a significant impact on already sluggish global economic growth, and the US stock market losing $5.4 trillion in two days, while global markets lost $5 trillion, as fears intensified about a global recession.
The US-China trade war has escalated, with both countries imposing tariffs on each other, sparking concerns about a global economic crisis and affecting stock markets worldwide, including a significant drop in the Dow Jones Industrial Average and the Shanghai Composite Index.
The trade war, initiated by US President Donald Trump, aims to balance the trade deficit between the US and other countries, particularly China, which amounts to $295.4 billion in 2024. However, experts argue that tariffs are a two-sided weapon that punishes both consumers and the US economy. The EU has taken a less belligerent position, suspending its countermeasures for 90 days, while China has reacted sharply, stating that it will fight to the end.
Leading investment banks on Wall Street are forecasting a global economic recession and a global crisis in the near future, with tariffs rates at the level of 100% or more expected to essentially halt or significantly restrict trade. The volume of trade between the US and China may fall by 80%, and the global financial order has been shaken, with the US dollar and Treasury bonds losing value.
The trade war has significant geopolitical consequences, damaging US credibility and sparking a re-evaluation of trade relationships, with countries looking for trade opportunities with each other and potentially gravitating towards China. The long-term consequences of the trade war will likely have a profound impact on the global economy and the US's international reputation.