US-China Trade War Escalates Global Economic Tensions

Nintendo has announced that retail preorders for the Nintendo Switch 2 will begin on April 24, having been delayed from April 9 due to tariffs imposed by President Donald Trump. The console will cost $449.99 in the US, with a bundle with "Mario Kart World" priced at $499.99. Accessories will experience price adjustments, with some increasing by $1 to $10. The console is set to launch on June 5, 2025.

Wells Fargo warns that despite temporary tariff relief, the latest escalation in the US-China trade war still poses a risk to the US agricultural sector, particularly soybean exports, which were China's leading import from the US in 2024. China has retaliated by raising its duties on US imports to 125% from 84%. Analyst Richard Garchitorena believes government subsidies could offset the impact, and the White House is considering providing aid to farmers, similar to the $16 billion bailout in 2019 and $12 billion emergency aid plan in 2018. However, the size of any additional aid package is uncertain, given the USDA's forecast of $42.4 billion in direct government farm payments in 2025.

China missed several key targets from its "Made in China 2025" plan to become self-sufficient in technology, and fostered unhealthy industrial competition, according to a report by the European Chamber of Commerce in China. The country attained technological leadership in only three out of ten strategic sectors: shipbuilding, high-speed rail, and electric cars. Despite this, China has advanced rapidly and is now a direct competitor with European and U.S. manufacturing. The report noted that China's self-developed airplane, the C919, still relies heavily on U.S. and European parts, and the growth rate of manufacturing value-added was only 6.1% in 2024, short of the target of 11%. China's rapid progress has increased global trade tensions and raised concerns about security risks, with the country's efforts to move up the manufacturing value chain contributing to "involution" or intense competition in industries such as electric cars.

The US is imposing high tariffs on Chinese goods under Donald Trump's presidency, leading to a significant decline in trade between the two countries. As a result, alternative destinations for Chinese goods are being sought, with South-East Asia potentially being affected by both increased Chinese imports and US tariffs.

The article discusses various aspects of the global economy, particularly focusing on the impact of the Trump administration's policies. Key points include: stock markets not rewarding firms for investing in the US due to Trump's policies; the potential for a shift in global trade as the US turns away from Chinese goods, potentially benefiting South-East Asia; the possibility of the euro becoming a global currency as the dollar falters; and the potential consequences of a decline in the dollar's dominance, including the impact on America's finances and the global economy. The article also touches on the ongoing trade tensions between the US and China, including China's use of rare-earth exports as a potential weapon.

The city of Yiwu in China's Zhejiang province, known as "Christmas Town," supplies nearly 90% of the US's Christmas decorations and is home to a massive 1,000-acre wholesale market. Vendors at the market are feeling the impact of President Donald Trump's tariffs, with some reporting losses of over $135,000 due to canceled contracts from American customers. The tariffs, which have exceeded 145%, have caused anxiety among vendors, who are worried about the future of their businesses. Many are being forced to pivot to other markets, while others are concerned about the potential for a global recession. The trade war is also affecting vendors who don't directly sell to the US, as the uncertain global economy may lead to reduced consumer spending.

The International Monetary Fund (IMF) has stated that US President Trump's tariffs will slow economic growth in some countries but will not cause a global recession. IMF managing director Kristalina Georgieva said there will be "notable" markdowns to growth forecasts and some nations will see higher inflation due to the tariffs. However, she warned that prolonged uncertainty over trade policies will lead to larger costs and worsening financial conditions.

Chinese manufacturers on TikTok claim to produce luxury goods, such as Hermès bags, at a lower cost and are selling them directly to consumers. The videos have gone viral, with many users expressing outrage and excitement at the prospect of buying high-end products at a fraction of the price. However, fashion experts are skeptical, pointing out that Hermès produces its high-end bags, like the Birkin and Kelly, in-house in France and not in China. While Chinese manufacturers do produce high-quality goods, experts warn consumers to be cautious and not to assume that the products being sold are authentic or of the same quality as the luxury brands. The trend is linked to the current tariff confusion and consumers' desire to find secret deals online.

Chinese President Xi Jinping visited Cambodia, strengthening ties between the two nations as the US imposed tariffs on Cambodian exports. Xi was greeted with giant red banners and oversized portraits, and a major thoroughfare was named after him. China is Cambodia's largest trading partner and foreign investor, and Xi pitched Beijing as a champion for developing nations. The visit comes as Cambodia tries to negotiate down US tariffs and maintain its export-led economy. Cambodia has also unveiled a Chinese-built naval base, which the government denies is a de facto Chinese military outpost. The visit is seen as a geopolitical move by China to expand its influence in the region, with Xi bringing 37 "cooperative documents" in various economic fields.

China has stopped buying liquefied natural gas (LNG) from the US after imposing a 15% tariff on such shipments on February 10, according to ship tracking data. China's LNG imports from the US had already declined significantly before the tariff, and instead, China expanded its purchases from Russia, which supplied four times as much LNG to China as the US did last year. Chinese energy firms had been buying LNG from the US but were selling it to Europe at higher prices rather than using it in China. The tariffs may not significantly impact trade flows, but could still hurt the US LNG industry and global economic growth.

China's Premier Li Qiang has called for a focus on promoting positive market expectations to counter the negative impact of the ongoing US-China trade war, describing the market economy as "largely an expectation economy". The trade war has dampened confidence and threatened jobs, prompting Chinese authorities to reassure businesses and individuals about the country's economic growth potential. Despite a 5.4% GDP growth in the first quarter, the economy's future prospects are uncertain due to the trade war, with the US imposing tariffs of up to 245% on Chinese exports.

Senior scientist Yi Shouliang has left the US to take up a new role at Sichuan University in China, amid escalating Sino-US tensions. Yi previously worked at the US Department of Energy's National Energy Technology Laboratory, where he focused on carbon capture and water management initiatives, before resigning in June 2023 and later leaving his adjunct professor role at the University of Pittsburgh. The circumstances surrounding his departure are unclear.

Mainland Chinese manufacturers at the Global Sources Hong Kong trade show are looking to the Middle East as an alternative market due to the impact of US tariffs imposed by the Trump administration. Companies such as Doogee, a consumer electronics manufacturer, are actively diversifying their customer base to mitigate the effects of the trade war. Doogee currently relies heavily on Europe and the US, but is exploring the Middle Eastern market, to which it already exports 200,000 tablets annually. The US has imposed cumulative tariffs of 145% on Chinese goods, increasing the effective tariff rate to around 156%.

A 7.7-magnitude earthquake in Myanmar may have disrupted the production and supply of rare earth elements to China, exacerbating price volatility and prompting China to diversify its sources. Myanmar is China's largest foreign supplier of rare earth elements, accounting for 57% of its total imports, particularly of dysprosium and terbium, which are crucial for making high-temperature magnets used in electronics and advanced weaponry.

Gerald Yin Zheyao, the 81-year-old founder, chairman, and CEO of Shanghai-based Advanced Micro-Fabrication Equipment (AMEC), has renounced his US citizenship and restored his Chinese nationality, according to the company's annual report. The move comes amid the escalating tech war between the US and China, with the US imposing restrictions on "US persons" being involved in certain China-based semiconductor fabrication facilities. Two other AMEC executives with US citizenship had previously stepped down from their positions.

Nvidia CEO Jensen Huang visited Beijing to meet Chinese officials, reassuring them of the company's commitment to the Chinese market despite US restrictions on semiconductor exports. Huang met with Vice-Premier He Lifeng, stating that Nvidia would deepen its presence in China due to its positive economic outlook. The visit came after the US tightened export licensing rules affecting Nvidia's H20 chips sold to China, expected to cost the company $5.5 billion.

Tesla's plan to mass-produce its Optimus robot at a price of US$20,000 may be thwarted by the US-China trade war, as the company relies heavily on China's supply chain for core components. Industry experts warn that without access to China's cost-efficient supply chain, Tesla's mass-production plan is likely to be put on hold, threatening Elon Musk's vision. China's mature manufacturing ecosystem and competitive pricing make it a crucial partner for humanoid robot manufacturers, with many components, including actuators, joints, and ball screws, being sourced from Chinese suppliers.

US President Donald Trump stated that the US and China are engaged in trade talks and expressed confidence that a deal on tariffs will be reached within the next three to four weeks. Trump claimed that Chinese officials have reached out to Washington multiple times and that the two sides have had "very good" trade talks, but he declined to provide evidence of progress or say if he had spoken to Chinese President Xi Jinping.

Senior members of the Donald Trump administration, including Vice-President J.D. Vance and Press Secretary Karoline Leavitt, are facing online backlash in China after Trump's latest trade war measures. Chinese internet users are mocking Vance over speculation that he wears eyeliner, with some joking that the tariffs will make his eyeliner more expensive, while others are accusing Leavitt of hypocrisy for wearing "made in China" dresses.

The US and China have shown signs of willingness to engage in trade negotiations, with US President Donald Trump claiming talks are underway and a deal on tariffs could be reached soon. Chinese analysts say meaningful progress hinges on greater "sincerity" from Washington. Trump hinted he may not increase tariffs on Chinese products further. The two economies have been locked in a tariff battle, with each imposing levies of at least 125% on the other, and China has stated it is open to negotiations under conditions of equal terms and mutual respect.

The US healthcare sector is at risk of disruption due to China's restriction on rare earth mineral exports, which are used in medical diagnostics and treatments for conditions like brain tumors and liver cancer, as part of China's retaliation against US tariffs in the ongoing trade war.

India and China are improving their relations amid concerns over US President Donald Trump's unpredictable policies, including his trade deal with China and tariffs on Chinese goods. The two longtime adversaries have been working to reduce tensions along their disputed 2,000-mile Himalayan border, where troops clashed in 2020. India has become more receptive to China's overtures as Trump's actions have disrupted regional balances of power. Analysts say India is hedging its bets and seeking more diplomatic flexibility, but the shift is tactical and not a realignment from their fundamentally adversarial positions. The two countries have agreed on new buffer zones, resumed direct flights, and allowed exchanges of scholars and journalists. However, the détente is cautious, with India still scrutinizing Chinese investments and maintaining a significant military presence along the border.