Market Rundown: US-China Trade War Continues Despite 90-Day Tariff Pause

Trade War Pause and Lingering Tariffs

• ⏸️ President Trump has paused most new US tariffs for 90 days, a move that contributed to Wall Street's best day since October 2008.
• ⚠️ However, a 10% duty on imports from most countries remains, with a 25% tariff on steel, aluminum, and cars.
• 🇨🇳 A significant tariff hike to 125% on China is still in place, indicating the trade war is far from over.

Impact on Businesses and Consumers

• 📦 Companies like Amazon, with about half of its sellers based in China, face difficult choices: doubling prices for US consumers or stopping sales to the US.
• 👕 Fast fashion giants like Shein and Teu, which manufacture in China, could see the era of ultra-cheap clothes and homeware end due to these tariffs.
• 📈 E-commerce exports from China were valued at $358 billion last year, highlighting the potential economic disruption.

Currency as a Trade War Front

• 📉 The Chinese yuan is at its lowest against the dollar since October 2007, as China's central bank devalues it to offset tariff impacts.
• 🏦 This currency devaluation is a move Washington does not want to see, suggesting financial systems could become a key battleground in the trade war.
• 💰 China's holding of $760 billion in US treasuries poses a potential retaliatory threat; selling these could spike US borrowing costs.

Inflation and Economic Growth Concerns

• 📊 The forecast for US inflation in March is 2.6%, a figure that only partially reflects the tariff news.
• ⚠️ Federal Reserve policymakers believe tariff uncertainty will lead to both higher inflation and slower economic growth this year, according to recent meeting minutes.