Trade Tensions: Trump's Tariff Tango with China and Its Impact on Taiwan

Analyzing the US-China Trade Spat and Its Potential Ripple Effects

The US-China trade dispute continues to escalate, with President Donald Trump maintaining that his tariff policies are "doing really well," despite China's retaliatory measures. This ongoing conflict between the world's two largest economies has significant implications, including for a country like Taiwan.

Following China's decision to hike tariffs on US goods to 125 percent, financial markets reacted negatively. Investors moved away from US government bonds, the US dollar declined, and stock markets experienced volatility. This was a response to the deepening concerns about the impact of the US-China trade war on already fragile global markets.

While initially imposing broad import taxes on numerous trade partners, Trump later rolled back these tariffs to 10 percent for a 90-day period, but simultaneously increased levies on Chinese goods.

President Trump expressed optimism regarding the trade situation via his Truth Social network, stating "We are doing really well on our tariff policy," and calling the situation "Very exciting for America, and the World!!!"

The White House later communicated Trump's continued optimism for a deal with China, also mentioning offers from 15 other countries during the 90-day tariff pause. However, White House press secretary Karoline Leavitt emphasized the US's willingness to respond forcefully to Chinese measures.

The tension intensified with reciprocal tariff increases. Chinese President Xi Jinping (習近平) commented, stating his country was "not afraid." He further suggested that the EU and China should "jointly resist unilateral bullying practices" during discussions with Spanish Prime Minister Pedro Sanchez.

Beijing responded to Xi's comments with a new tariff of 125 percent on US goods, matching the US's imposed 145 percent level on Chinese imports.

Trump reiterated his interest in reaching an agreement with Xi Jinping. "He's been a friend of mine for a long period of time. I think that we'll end up working out something that's very good for both countries," he told reporters.

Meanwhile, there was weaker demand for US government bonds. Wall Street ended the week on a positive note, but US Federal Reserve policymakers cautioned about the potential for higher inflation and reduced growth due to Trump’s tariff strategies.