If Trump fulfills his threat of imposing an additional 50% tariff on China, the global economy will face a domino effect of chain reactions, with specific impacts unfolding across five dimensions:
First wave of impact: Forced reconstruction of global supply chains.
• China's position as the 'world's factory' will face direct impact, and American importers may be forced to shift orders to alternative production locations such as Vietnam and Mexico, which will lead to supply shortages and soaring costs in the short term.
• The automotive industry will be hit first; if the Model 3 produced at Tesla's Shanghai Gigafactory is subjected to a 50% tariff, its price in the U.S. will exceed $60,000, directly threatening its market competitiveness.
• Tech giants like Apple need to reassess the 'China +1' strategy, as supply chain diversification will lead to efficiency losses, and global manufacturing logistics costs are expected to rise by 8-12%.
Second wave of impact: Nuclear explosion effect in financial markets.
• The foreign exchange market will experience severe fluctuations; the U.S. dollar index may rise initially before falling, and the exchange rate of the yuan against the dollar may break through the psychological barrier of 7.5, leading to a collective sell-off of emerging market currencies.
• Global stock markets will experience a 'tariff panic day'; the S&P 500 index may see a single-day drop of more than 2%, and tech stocks and cyclical stocks will be hit hard.
• The commodities market will show extreme polarization: Gold will break through $2,200 per ounce, copper prices may plummet below $7,000 per ton, and oil prices will be under pressure due to worsening demand expectations.
Third wave of impact: Crisis of trade system collapse.
• The WTO dispute resolution mechanism will completely fail, and global trade rules will enter an 'every man for himself' era, as countries accelerate the formation of exclusive trade groups.
• RCEP and CPTPP may expand rapidly, but the fragmentation of regional trade agreements will increase global trade costs, with global trade growth expected to decrease by 1.5-2 percentage points.
• Developing countries will be the biggest losers, with the World Bank predicting an increase of 30 million people in extreme poverty.
Fourth wave of impact: Risk of uncontrolled monetary policy.
• The Federal Reserve will fall into a 'inflation-growth' dilemma; if forced to raise interest rates above 6%, the U.S. real estate bubble may burst, significantly increasing the risk of a subprime crisis 2.0.
• The global debt market will face a perfect storm, with emerging market sovereign debt default rates possibly rising by 40%, and a wave of corporate debt defaults may trigger a chain reaction.
Fifth wave of impact: Escalation of geopolitical powder keg.
• The Taiwan Strait will become more sensitive due to increased economic pressure, and the technology war may expand to core areas such as semiconductors and AI.
• The EU will accelerate its 'strategic autonomy' process, and cracks may appear within NATO, facing pressure for a restructuring of the global security architecture.
[Policy Countermeasures Simulation]
China may adopt a three-stage countermeasure strategy:
Impose equivalent tariffs immediately, focusing on targeting the electoral situation in U.S. agricultural states (products like soybeans and pork).
Launch an 'unreliable entity list' to restrict market access for American companies operating in China.
Sell off U.S. Treasury bonds to pressure the exchange rate while accelerating the internationalization process of the Chinese yuan.
The final result of this tariff gamble may determine the basic framework of the global economic order for the next decade.
