After a significant rise in U.S. stocks, futures began to decline, indicating that investors are not yet reassured. President Trump’s decision to delay tariffs on most countries for 90 days temporarily boosted the markets, but the continued imposition of tariffs on China has increased concerns, especially since China responded by applying high tariffs on U.S. goods.
The trade conflict between Washington and Beijing has entered a new phase, with the U.S. raising tariffs on China to 125%, and China retaliating by raising its tariffs to 84%. This escalation heightens fears of a global economic slowdown and creates instability in the markets. Investors are now proceeding with caution because such escalation pressures companies and disrupts global trade flows.
Oil prices dropped after having risen to $63, due to concerns over weak global demand resulting from the trade war, especially from China, which is the largest importer of oil. At the same time, markets are awaiting U.S. inflation data, as it will indicate whether the tariffs have started to push prices up, which could influence the Federal Reserve’s decisions on interest rates.
Goldman Sachs has lowered its forecast for China’s economic growth to 4.0% in 2025 and 3.5% in 2026, down from previous estimates of 4.5% and 4.0%. The downgrade is a direct result of the U.S. raising tariffs on Chinese imports to 125%, which has directly impacted China’s economic outlook.
As Goldman Sachs pointed out, the increase in tariffs from 11% to 125% since the beginning of Trump’s term could reduce China’s real GDP by about 2.6 percentage points, including 2.2 percentage points in 2025 alone. The Chinese government is expected to implement further stimulus measures, such as cutting interest rates by 60 basis points this year and increasing the fiscal deficit to 14.5% of GDP, compared to 10.4% last year.
