Trade War Updates: Rising Tensions between U.S. and China Disrupt Global Markets

The U.S.–China trade war has intensified sharply in April 2025, triggering global economic concerns and unsettling financial markets. What began years ago as tariff disputes has now escalated into a full-blown economic confrontation, with both superpowers implementing aggressive measures that ripple across supply chains and global trade routes.

The U.S.–China trade war escalates in 2025 with higher tariffs and economic retaliation

Tariff Escalations Reach New Highs

Earlier this month, the U.S. administration under President Donald Trump imposed a steep 145% tariff on a wide range of Chinese imports. This marked one of the most significant tariff hikes since the onset of the trade conflict. In retaliation,

China raised tariffs on American goods to 125% and introduced export controls on critical rare earth elements, essential for global electronics and defense industries.

These moves have strained industries worldwide, especially manufacturers reliant on cross-border components and raw materials.

Mixed Signals on Trade Negotiations

Despite rising tensions, President Trump claimed that trade talks with China are ongoing. However, Chinese officials publicly denied that formal negotiations are taking place, dismissing such claims as misinformation. While both sides acknowledge some level of communication, there appears to be no clear pathway toward a resolution.

This diplomatic stalemate has heightened uncertainty for businesses and investors, with no immediate signs of de-escalation.

China’s Economic Response Strategy

In response to mounting economic pressure, President Xi Jinping unveiled a comprehensive domestic stimulus plan aimed at cushioning the Chinese economy. Key measures include enhanced unemployment benefits, increased financial support for businesses, and initiatives to boost household incomes and domestic consumption.

Interestingly, China has also opted to quietly exempt certain U.S.-made semiconductors from its high tariff list. This strategic move aims to safeguard China's technology sector, which remains heavily dependent on advanced U.S. components.

Global Economic Impact

The consequences of this trade war escalation are being felt globally. Stock markets have seen sharp corrections, with tech and manufacturing sectors particularly hard-hit. In a major shift, Apple announced plans to relocate a significant portion of its iPhone assembly operations from China to India, highlighting how companies are reconfiguring supply chains to mitigate tariff risks.

The International Monetary Fund (IMF) has revised its global growth forecast downward from 3.3% to 2.8%, citing the prolonged trade conflict as a major drag on economic momentum.

Implications for Singapore and Asia

As a key global trading hub, Singapore is highly exposed to fluctuations in international trade dynamics. Deputy Prime Minister Gan Kim Yong recently cautioned that the trade war could lead to slower economic growth and higher costs for consumers and businesses alike.

However, analysts note that Southeast Asia, including Singapore, could benefit from trade diversions. Companies seeking to bypass tariffs may increase sourcing and manufacturing activities in ASEAN countries, offering both challenges and opportunities for regional economies.

Conclusion

The U.S.–China trade war shows no signs of abating, with heightened tariffs and strategic economic maneuvers defining the current landscape. As global markets adjust to this new phase of economic rivalry, businesses will need to remain agile, reassess supply chains, and prepare for prolonged volatility. The world watches closely for any breakthrough in negotiations, but for now, the path forward remains uncertain.