China Escalates Trade War with US, Hitting Imports with 125% Tariffs

China's Retaliation in Trade War

• 🇨🇳 China has retaliated against the US by hiking duties on US imports to 125%.
• 🇺🇸 This action follows the White House's decision to impose duties of 145% on China.

Market Volatility and Recession Fears

• 📉 The escalating trade war is causing significant market jitters and deepening fears of a global recession.
• 📊 The average duty paid by American consumers on imports is projected to reach 27%, the highest since 1903.
• 📈 Goldman Sachs estimates a 45% chance of a US recession this year due to these trade tensions.

US Dollar and Treasury Performance

• ⚠️ The US dollar has reached a three-year low against the euro, deviating from its typical safe-haven status during market volatility.
• 💰 Investors are shifting money into other currencies like the euro, Swiss franc, and yen, and are selling off US debt.
• 📈 The yield on the 30-year Treasury has seen its steepest weekly rise since 1982.

Corporate Earnings and Investment Banking Impact

• 🏦 Major financial institutions like JP Morgan, Morgan Stanley, Wells Fargo, and BlackRock are reporting quarterly earnings, facing uncertainty from tariffs.
• 💼 JP Morgan CEO Jamie Dimon anticipates the trade war will lead to a recession and borrower defaults.
• 🚫 Uncertainty has also resulted in cancelled IPOs and impacted investment banking.

Shein's IPO Amidst Trade Tensions

• 🛍️ Chinese fast fashion giant Shein received regulatory approval for its IPO in London, a move that surprised some given the trade war.
• 📉 Shein's valuation has reportedly fallen from $66 billion in 2023 to a potential $50 billion, even before the latest tariff escalations.
• 💸 The US decision to scrap the tax exemption for parcels under $800 further complicates trade dynamics.