US-China Trade War Escalates Global Economic Tensions

China has responded to the US tariffs on goods by targeting US services and other areas, including travel, legal, consulting, and financial services, where the US has a significant surplus. China has imposed non-tariff restrictive measures, such as widening export controls on rare-earth minerals and opening antitrust probes into American companies like DuPont and Google. Beijing has also restricted US companies' access to key minerals, put US businesses on an "unreliable entity" list, and ordered Chinese airlines to stop taking deliveries of Boeing jets. Additionally, China has reduced imports of US films, warned citizens against traveling or studying in the US, and issued notices to apprehend individuals for cyberattacks against China on behalf of the US National Security Agency. Experts believe China is seeking to broaden the trade war and create pressure on the US, and that the decoupling of the two economies is accelerating.

Japan's March exports rose 3.9% year-over-year, missing expectations of a 4.5% increase. The growth was lower than February's 11.4% jump and was impacted by US tariffs on steel and aluminum. Exports to the US, Japan's second-largest trading partner, increased 3.1%. The trade data comes as Japan is in trade negotiations with the US, with President Trump saying there was "big progress" in the talks. Japan's trade deficit narrowed to 544.1 billion yen but was wider than expected. Experts warn that Japan's exports are being replaced by Chinese-made products, which could hurt Japan further in the event of escalating US-China trade wars.

South Korea's central bank held its policy rate at 2.75%, in line with expectations, to shore up its currency amid high uncertainty regarding its economic outlook. The bank warned that GDP growth for 2025 is expected to fall below its February forecast of 1.5% due to weaker domestic demand and exports. The decision comes as the country grapples with U.S. tariffs and prepares for a snap presidential election on June 3.

Taiwan Semiconductor Manufacturing Company (TSMC) reported a 60.3% increase in net income to $361.56 billion New Taiwan dollars and a 41.6% rise in net revenue to $839.25 billion in the first quarter, beating expectations. The company's results were driven by strong demand for AI chips, but its growth is threatened by the trade policy of U.S. President Donald Trump, who has imposed tariffs on Taiwan and stricter export controls on TSMC clients Nvidia and AMD. TSMC has been investing in overseas facilities to diversify its supply chains, announcing an additional $100 billion investment in the U.S. and partnering with clients like AMD and Nvidia to produce chips in its Arizona facilities.

China is attempting to unite countries against the Trump administration's tariffs, with President Xi Jinping making diplomatic efforts to persuade other nations not to cave to US pressure. Xi has held talks with European, Japanese, and South Korean officials, and visited Vietnam and Malaysia, portraying China as a defender of the global trading system. However, his efforts have been met with wariness, with countries hesitant to align with China due to concerns over its coercive economic behavior and the risk of US retribution. The European Union, Japan, and South Korea have pushed back against China's attempts to form a united front, and Australia has rejected China's call to "join hands" against the US. Vietnam, while lavishing Xi with honors during his visit, resisted agreeing with his comments condemning protectionism and ultimately signed a vague joint statement. China's efforts are driven by a fear that the US will isolate it through trade deals with other countries, and Beijing has warned that countries that "pander to the United States" will face consequences.

South Korea is preparing for trade talks with the US and plans to use its thriving shipbuilding industry as a bargaining chip to mitigate the 25% tariff on its exports. The US is interested in cooperating with South Korea in shipbuilding to revive America's maritime industry, and South Korean firms have already begun investing in US shipyards. South Korea hopes to secure a trade deal that includes large purchases of American liquefied natural gas, lowering its trade surplus with the US. However, analysts are skeptical about the depth of cooperation between the two countries and the effectiveness of Trump's plans to revive American shipbuilding.

A Pew Research Centre survey has found that American attitudes towards China have softened for the first time in five years, with a 10-point drop in the percentage of respondents with "very unfavourable" views towards China to 33 per cent. Overall attitudes remain negative at 77 per cent, but the percentage of Americans who view China as an "enemy" decreased from 42 per cent to a third. The survey of 3,605 American adults was conducted before a recent escalation of tariffs on China by US President Donald Trump.

The US-China trade war is causing a decoupling of the two economies, splintering global supply chains in complex and risky ways. As tariffs reach triple digits, manufacturers are seeking survival through off-the-books workarounds, including grey routes and proxy factories. The US has imposed cumulative tariffs of 145% on Chinese goods, with China's retaliatory actions resulting in a 245% tariff on US imports. The rapid pace of tariff changes is forcing suppliers to rapidly evaluate their relationships and options.

Chinese President Xi Jinping arrived in Cambodia on the final leg of his three-country Southeast Asian tour, where he met with King Norodom Sihamoni and is set to hold talks with Prime Minister Hun Manet. Xi emphasized the strong ties between China and Cambodia, describing their relationship as "as solid as a rock" and reiterating China's commitment to strengthening cooperation with its neighbour to promote regional and global stability.

The European Union is drawing lessons from its recent clashes with China as it prepares to face off against the US under Donald Trump, turning some of the tactics it used against Beijing towards Washington amid a worsening trade war, testing the bloc's unity.

Some Hong Kong-based shipowners are considering changing their vessels' registration flags to jurisdictions like Panama and Liberia to mitigate rising geopolitical risks and US tariffs in the ongoing trade war between the US and China, potentially impacting Hong Kong's development as a shipping hub.

US President Donald Trump's aggressive tariff policies are harming "all US assets" and accelerating a long-term shift away from the dollar, according to Mark Dowding, chief investment officer of fixed income at RBC Bluebay Asset Management. Dowding believes the trade war has triggered a "longer-term turning point" for the dollar's status as the global reserve currency and undermines Washington's policy credibility, making the dollar less attractive to investors, including China, which may reduce its holdings of US Treasuries.

Nvidia CEO Jensen Huang made a surprise visit to Beijing after the US restricted the sale of its AI chips to China, including a lower-powered version designed to comply with previous restrictions. Huang met with the head of the China Council for the Promotion of International Trade and the founder of AI company DeepSeek, discussing potential new chip designs that wouldn't trigger US bans. The US restrictions, which cost Nvidia $5.5bn in earnings, are part of a broader effort to limit China's access to advanced tech amid a growing AI rivalry between the two nations.

A Uyghur rights group has called on international hotel chains to stop operating in Xinjiang, China, saying their presence "sanitizes" the Chinese government's human rights abuses in the region. The Uyghur Human Rights Project identified nearly 200 international hotels operating or planning to open in Xinjiang, including brands such as Accor, Hilton, and Marriott. The group said some hotels have links to forced labor and labor transfer programs, and that their presence lends legitimacy to the Chinese government's crackdown on the local Muslim population. The Chinese government has been accused of committing crimes against humanity and genocide against Uyghurs and other ethnic minorities. The report calls on hotel chains to freeze expansion plans, halt operations, and sever business ties with entities involved in human rights abuses.

China is ramping up its propaganda efforts to counter a public relations war with the US, sparked by President Donald Trump's tariff actions. Chinese diplomats are using banned social media platforms like X and Facebook to post historical footage, including clips of Ronald Reagan and Mao Zedong, to criticize Trump's handling of the trade war and portray the US as the aggressor.