13 Oct 2025
President Trump announced an additional 7% tariff on China, bringing the total to 37% from November 1st, in retaliation for China's restrictions on rare earth element exports. This escalation has intensified global trade concerns, leading to market volatility and warnings from international financial institutions about potential stock market corrections.
President Trump announced an additional 7% tariff on Chinese goods, effective November 1st, increasing the total tariff to 37%.
This tariff hike follows China's imposition of restrictions on the export of rare and scarce earth elements.
Trump also mentioned implementing export controls on vital software and hinted at potentially reconsidering a broader tariff program if China cooperates.
Increased tensions have reduced the likelihood of a meeting between President Trump and Xi Jinping.
The escalating trade dispute fueled concerns about potential global economic disruption and the decoupling of economic ties between the two major countries.
While tensions are high, both nations are generally disinclined to transform the trade conflict into a full-scale trade war, as it would be detrimental to their economies.
Financial markets reacted sharply to the news, with risky assets like cryptocurrencies and major stock indices (S&P, Nasdaq) experiencing significant declines, while safe-haven assets like gold saw growth.
The actions by both China and the US are perceived as pressure tactics aimed at advancing trade negotiations, though no improvement in negotiation status has been reported.
Recent data revealed China's goods exports grew at their fastest rate in six months, exceeding forecasts, demonstrating resilience in its economy.
China's exports in September grew by 8.7% year-on-year, marking the highest monthly total recorded so far.
Despite tariffs, China's exports remain resilient due to the adaptability of its export markets and strong competitiveness, limiting the tariffs' impact on Chinese trade.
Exports to the United States decreased by 27%, marking the sixth consecutive double-digit decline.
The decline in exports to the US was offset by increased trade with other markets, such as the European Union and Africa, with overall exports to non-US destinations rising by 14%, the fastest rate since March 2023.
Increased demand from non-US markets and indirect exports through third countries to the US contributed to a slight increase in China's trade surplus with the US.
Imports into China from various sources experienced a significant increase, reaching a 17-month high, although imports from the US remained lower.
No significant economic data is expected this week, with CPI data scheduled for release on October 24th, while PPI data might not be published.
Federal Reserve members and Chairman Powell are scheduled to deliver speeches this week, alongside the IMF and World Bank conferences.
Central banks globally are increasingly concerned about a potential stock market correction or crash.
Warnings about a potential bubble in stocks of companies active in the AI sector are intensifying.
Current stock market valuations have reached levels reminiscent of the dot-com bubble era, prompting fears of a sharp price correction that would be particularly detrimental to developing countries.
Similar high stock valuations in 2000 led to market crash concerns and prompted the Fed to an emergency 0.5% interest rate cut.
Global authorities, including the Bank of England, the European Central Bank, and Italy's central bank, have also previously issued warnings about market correction risks.
The World Economic Outlook (WEO) report is expected to be released during this week's IMF/World Bank meetings.
Chairman Powell's speech on the labor market, inflation, and monetary policies on Tuesday is anticipated to be significant for the US market.
Global trade tensions and escalating market valuations underscore a cautious economic outlook, with significant risks of market correction and disruption.
| Insight | Detail | Impact |
|---|---|---|
| US Imposes Steeper Tariffs on China | An additional 7% tariff (totaling 37%) on Chinese goods from November 1st was announced by Trump, retaliating against China's rare earth export restrictions. | Global stock markets (S&P, Nasdaq), and cryptocurrencies experienced declines, while safe-haven assets like gold saw appreciation. |
| China's Export Sector Shows Resilience | Chinese goods exports grew 8.7% year-on-year in September, marking the fastest rate in six months and exceeding economists' forecasts. | Strong demand from non-US markets, especially Africa and Europe, and market diversification, mitigated the impact of US tariffs, despite a 27% drop in exports to the US. |
| Global Warnings of Stock Market Bubble | The IMF and World Bank voiced concerns about a potential stock market bubble, particularly in AI-related companies, comparing current valuations to the dot-com era. | A significant risk of a sharp price correction is highlighted, which would be particularly detrimental to developing countries; this mirrors 2000's warnings that led to a Fed emergency rate cut. |
