US-China Trade War Escalates

China's exports rose 12.4% in March from a year earlier, exceeding expectations and driven by businesses frontloading shipments to avoid US tariffs. Imports fell 4.3%, continuing a decline due to weak domestic demand. The Chinese government has set a 5% annual growth target, but escalating trade tensions and lackluster consumption may make it harder to achieve. Exports to the US, ASEAN, and EU rose, while imports of iron ore and soybeans declined. Economists expect exports to weaken in coming months and are calling for more stimulus measures to boost domestic demand. Several investment banks have revised China's growth forecasts downward, with Goldman Sachs expecting 4.0% growth this year.

Billionaire Ray Dalio warns that President Donald Trump's tariff war could lead to a recession or "something worse" if not handled properly. Dalio, founder of Bridgewater Associates, expressed his concerns on NBC's "Meet the Press," stating that the US is at a "decision-making point" and close to a recession. He believes Trump's tariff plan has been "very disruptive" and is "like throwing rocks into the production system." Dalio's concerns are echoed by major Wall Street banks, including Goldman Sachs, which has forecast a 45% chance of a recession in the US over the next 12 months.

President Donald Trump's trade war with China is escalating, with the US imposing 145% tariffs on Chinese goods and China retaliating with 125% tariffs on US imports, risking a deep impact on the US economy. The US and China have intricately entwined economies, with the US relying on China for consumer electronics, rare earth minerals, and pharmaceuticals, making a full-blown trade war potentially disastrous for both sides. Trump is under pressure to de-escalate the situation, but China's President Xi Jinping is declining to call Trump to seek a deal, and the administration's messaging has been inconsistent, with some exemptions to tariffs being announced and then reversed. The White House is betting that the US economy's strength will force Xi to offer concessions, but experts warn that Xi's government may be willing to impose pain on its populace to avoid losing the trade war, and that Trump's brinksmanship may not work.

Donald Trump's ability as a deal-maker has been questioned after his tariff plans caused economic damage worldwide. Trump's decision not to implement the tariffs he had announced brought relief, and his advisers claimed it was part of a cunning plan. However, the move was seen as a climbdown, and Trump's tactic of making big demands and then negotiating down was not effective. The markets showed that Trump does not have the muscle to impose his will, and trading partners are likely to negotiate down from the lower baseline he has conceded. Trump's supporters are trying to save face by suggesting his moves were about confronting China, but the US may not have the leverage it thinks it does, and Trump may make concessions he should not, such as selling out Taiwan, to pose as a deal-maker.

China's exports rose 12.4% in March to $313.9 billion, driven by a pre-tariff rush ahead of expected US tariff increases, but analysts expect shipments to drop in the coming months and quarters. Imports sank 4.3% year-on-year, resulting in a trade surplus of $102.64 billion for March. The surge is seen as a "final hurrah" for China's export machine before global trade faces uncertainty due to drastic US tariff changes.

The US exemption of certain electronic devices from its tariffs on Chinese goods has brought more confusion than relief to China's electronics firms. The exemptions only cover a small portion of China's vast electronics supply chain, leaving many smaller firms unaffected. Additionally, the US administration's plan to introduce new "sectoral tariffs" targeting the industry has added further uncertainty, leaving many in China bewildered and frustrated.

Hong Kong industry leaders have warned local exporters against evading US tariffs on small parcels through illegal transshipments or parallel imports, cautioning that companies risk prosecution, criminal liabilities, and damage to the city's reputation following US President Donald Trump's move to raise tariffs on such shipments.

China has downplayed the risks associated with US President Donald Trump's tariffs, with a customs official stating that "the sky won't fall" for Chinese exports. The country has diversified its trade away from the US in recent years and is focusing on its "vast domestic market" to buffer against global volatility. Despite Trump's threats to impose new tariffs, including on pharmaceutical goods, and mixed signals on electronics restrictions, stock markets rallied, with gains in Japan, Hong Kong, and European markets. China's President Xi Jinping criticized US tariffs, stating that a "trade war and tariff war will produce no winner."