11.04.25 - Tariff auction - who makes the highest bid

After the US imposed a steep 145% tariff on Chinese imports yesterday, China has responded by increasing its own tariffs on US goods to 125%, up from the previous 84%. The tit-for-tat escalation underscores mounting trade tensions between the two largest economies.

Markets: Globally stock indices turning red, gold above 3’200 for the first time, US dollar slumps with dollar index down more than 1.5%, US interest rates hovering around 4.4% level. Cryptos trading stable

My view: Compared to the initial tariff announcements, markets no longer react with the same intensity. However, each new development in this tariff battle seems to nudge stock indices further into negative territory, setting off steady downward trends.

This ongoing back-and-forth between the world’s two largest economies feels like a playground contest, two kids seeing who can say the bigger number. I am just waiting for one of them to shout “infinity… infinity+1…”

My view remains unchanged, the US may actually be more dependent on China than the other way around. Regardless of who has the upper hand, this trade war is clearly hurting the global economy. It weighs on sentiment and clouds the short- and mid-term outlook with uncertainty. To make matters worse, the weak US dollar makes imports even more expensive, adding further pressure to already sticky inflation. Not a good sign for upcoming inflation figures and the consumer sentiment.

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