#TradeWarEases

Impact of Trump's Tariffs in the Trade War

In 2025, during his second term, Donald Trump intensified the trade war with China through a series of aggressive tariffs that provoked global economic tensions and a strong reaction from Beijing.

Tariff Escalation

Starting in February 2025, Trump imposed a universal tariff of 10% on most imports, followed by a specific increase of 145% on Chinese products, arguing unfair trade practices and China's lack of cooperation in the fight against fentanyl trafficking. China responded with tariffs of 125% on American products, affecting key sectors such as agriculture, energy, and technology. Additionally, it implemented restrictions on the export of strategic minerals and sanctioned American companies linked to defense and technology.

Economic Impact and Internal Pressure

The tariff measures caused an 8% drop in the S&P 500 during the first 100 days of Trump's term, marking the worst performance in over half a century. Business leaders and politicians, such as Warren Buffett, criticized the strategy, pointing to rising consumer prices and disruptions in supply chains.

De-escalation Agreement

On May 12, 2025, after negotiations in Switzerland, the United States and China agreed to a mutual reduction of tariffs: the U.S. lowered its tariffs from 145% to 30%, while China reduced its tariffs from 125% to 10%. This agreement included a 90-day pause on the imposition of new tariffs and China's commitment to eliminate non-monetary trade barriers and increase efforts to combat fentanyl trafficking. Markets reacted positively, with a 2.6% increase in the S&P 500.

Despite this truce, structural tensions related to technological competition and national security persist, suggesting that the trade relationship between both countries will remain volatile in the near future.