US-China Trade at Ice Point: Market Turbulence and Future Concerns After the Tariff War
Starting from April 2025, the US-China trade war entered a new phase, with China implementing tough tariff countermeasures on imports from the United States, initially imposing a 34% tariff, followed by an additional 50% secondary countermeasure, bringing the total tariff level to 84%. Although it did not touch the 20% basic tariff of the United States, the tariffs exceeding 50% have brought bilateral trade close to an ice point. This move not only reshaped the economic relationship between China and the United States but also had profound impacts on US stocks, cryptocurrencies, and the global market, with future market trends full of uncertainties.
The trade ice point will impact the US stock market. The prices of consumer goods and raw materials in the United States, which heavily rely on Chinese supply chains, will rise due to the surge in tariffs, raising inflation expectations. The S&P 500 and Nasdaq indices may further decline due to pressure on corporate profits, especially for tech giants, as their supply chains are deeply embedded in China. In the short term, US stocks may experience a sell-off driven by heightened risk aversion, compounded by tariff uncertainties, which may amplify market volatility. If US stocks continue to decline, it could even trigger a liquidity crisis, dragging down global stock markets.
The cryptocurrency market presents dual possibilities. On one hand, assets like Bitcoin may benefit from their 'safe-haven' properties, especially if the dollar appreciates due to the trade war, thereby weakening the attractiveness of traditional assets, leading institutional funds to accelerate their flow into the crypto market, driving up prices. On-chain data shows that institutional wallets have been continuously increasing their holdings recently, reflecting their hedging intentions. However, if a crash in US stocks triggers deleveraging, highly leveraged crypto positions may face selling pressure, leading to severe short-term corrections. In the long term, the trade war may prompt countries to explore digital currency reserves, potentially enhancing the status of the crypto market.
On a global scale, the shrinking US-China trade will lead to fluctuations in the dollar exchange rate, volatility in commodity prices, and precious metals may rise due to safe-haven demand. Other countries may fill the trade vacuum, but the risk of regional friction is also increasing. If China and the US cannot ease the situation, economic 'decoupling' will extend from trade to technology and finance, with the volatility of US stocks and the crypto market remaining high for the long term. In the short term, investors need to be wary of the risks of coexistence of inflation and recession; in the long term, the global economy may fall into a low-growth quagmire due to reduced cooperation, and the market outlook is not optimistic.
