Global Markets Tumble as US-China Tariffs Surge to 245%

Two weeks have passed since the initial Liberation Day announcement, and global markets have experienced significant fluctuations. US equities have continued to decline, with stocks falling, rising, and then falling again. The dollar has also been on a downward trend. Gold, initially dropping after Liberation Day, has since hit a new record high.

Bond markets have seen dramatic sell-offs, raising concerns about a massive basis trade unwind or retaliatory selling from large foreign holders. The situation reportedly alarmed the Trump administration, leading to a walkback of some policies.

Tariff policies have also seen changes this month. After announcing a 90-day pause on rates exceeding 10% for most countries, the Trump administration increased its levies on China multiple times. Some goods, such as electric vehicles and medical syringes, now face tariffs of 245%.

Exemptions have been issued for certain consumer electronics, including smartphones and computers, from both reciprocal tariffs on China and the 10% global tariff on all imports. However, these exemptions are temporary, and products imported from China are still subject to a 20% levy.

The impact of these tariffs on major companies like Apple is significant. If the price of an iPhone increases to $2,500, it could lead to a plummet in Apple's market cap, affecting retirement accounts and pensions.

Today, US equities were back in the red midway through the session, with futures plummeting overnight. The dollar was also trading lower, but Treasurys were on the upswing. NVDA led a selloff in tech stocks due to news that the US government is restricting sales of its H20 chips to China, resulting in a $5.5 billion charge on its first quarter earnings.

Investors were not moved by Fed Chair Powell’s remarks, in which he gave no indication that the central bank plans to save markets with interest rate cuts. Powell expressed satisfaction with the labor market but noted that tariffs pose an unknown risk to inflation. He also mentioned that Trump’s tariff rates have been higher than central bankers’ most extreme scenarios.

Analysts predict that the Fed is unlikely to intervene with interest rate cuts, and investors should brace for continued market volatility.