Mon Apr 07 16:10:00 UTC 2025: ## US-China Trade War Intensifies as Beijing Responds Aggressively to New Tariffs
**HONG KONG** – The US-China trade war has escalated dramatically after Beijing unleashed a forceful response to President Trump’s latest tariffs, effectively ending hopes for a near-term trade deal. Analysts warn of a potential “escalatory spiral” and increased risks of a complete decoupling of the two economies.
China retaliated against the 34% US tariffs with matching duties on all US goods, a significant departure from its previous, more measured approach. This broad-based response also includes export restrictions on rare earth elements and dual-use items, along with adding 11 US firms to its “unreliable entities” list.
Economists warn of significant economic consequences. Morgan Stanley estimates the new tariffs could shrink China’s economy by 1.5 to 2 percentage points this year. The aggressive stance has already triggered a global market rout, with the Hang Seng China Enterprises Index experiencing its worst day since the 2008 financial crisis.
While President Trump dismissed China’s actions as “panic,” analysts suggest Beijing’s shift reflects diminished hopes for a trade deal, at least in the short term. The potential sale of TikTok to US investors was floated as a possible bargaining chip by Trump, but experts note that such a deal would likely be politically unacceptable to China.
Despite the heightened tensions, some analysts believe Beijing still desires a deal and that its aggressive response is a negotiating tactic. China has outlined plans to mitigate the economic impact through increased domestic consumption, lower interest rates, and further fiscal easing.
The escalating trade war leaves the global economy facing significant uncertainty, with the potential for prolonged disruption and further market volatility. The possibility of a complete economic decoupling by 2025 is increasingly being discussed by experts.
First Piper 