Copy article

"The global economy is staring into the abyss" as China retaliates

ended 04. April 2025

Markets globally are in meltdown two days after Liberation Day following China's retaliatory tariffs. Newspage asked economists, traders and investment managers how bad this could get. One warned: “If tensions escalate further, we risk a feedback loop of tariffs, market stress and recession fears." Another said simply: "The global economy is staring into the abyss”. Views below.

5 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Gabriel McKeown
Political & Economics Writer at Sad Rabbit - Substack Newsletter
The global economy is staring into the abyss as markets reconcile themselves with a geopolitical reality that was previously confined to diplomatic briefings and media speculation. The scale of the sell-off reflects not just investor panic but a dawning realisation that a trade war is no longer a bilateral spat, and may feed through into a systemic shock to the global economy. What makes this moment particularly perilous is the lack of clarity on how this escalation will be resolved. Many believed the tariffs were designed as leverage for negotiations, yet there are very real fears that they could remain indefinitely. There is a growing consensus that Washington shows no signs of reversing course, framing these tariffs as essential for restoring economic sovereignty and correcting decades of perceived trade imbalances. This entrenched stance indicates that we may be witnessing not just a temporary shock but the beginning of a protracted economic realignment not seen in decades.
Star Quote
Copy

Premium
Prem Raja
Head of Trading Floor at Currencies 4 You
China’s retaliatory tariffs have deepened global market turmoil, shaking confidence in both US equities and the dollar. The S&P 500 has seen its sharpest drop since 2020, led by declines in trade-sensitive tech and industrials, while the dollar index (DXY) is wobbling as safe-haven demand clashes with concerns over US growth. Global contagion is evident, with emerging markets under pressure and risk appetite deteriorating. Central banks are watching closely—some, like the ECB, may accelerate cuts, while the Fed remains cautious for now. If tensions escalate further, we risk a feedback loop of tariffs, market stress and recession fears. However, rising political and economic costs could yet push both sides back to the negotiating table.
Copy

Editor
Riz Malik
Independent Financial Adviser at R3 Wealth
Things could deteriorate quickly if the sell off continues and global retaliation ramps up. Trump’s Liberation Day tariffs were designed to make a statement but may have underestimated the global fallout. If other nations hit back harder, the US risks isolating itself economically with serious consequences for markets worldwide.
Copy

Editor
Tony Redondo
Founder at Cosmos Currency Exchange
Brace for impact. Global markets are tanking two days after Trump’s “Liberation Day” tariffs (10%-49% on U.S. imports) were met by China’s 34% retaliation on US goods, effective from 10 April. The S&P 500 has fallen by 4.8%; the Nasdaq is down 20% from its December peak, signaling a bear market. Worst case: we’re staring at a 1930s-style depression by year-end with collapsed supply chains, soaring inflation, and stalled growth. JPMorgan says the odds of a recession have climbed 20% to 60% this week. If the EU and Canada join China in retaliating with tariffs, the US GDP could drop 2-3% and stagflation looms. Trump-Xi standoff could crash markets 20-30% more, echoing 2008. Negotiation might limit losses to 10-15%. Volatility rules either way.
Copy

Faisal Sheikh
Managing Director at Monmouth Capital
The markets have norovirus. While it’s happening, when you are hunched over the toilet bowl, it feels like it won’t end, and you’ll do anything to make it feel better. “I’m never eating again,” you tell yourself at one point. “Maybe just soup and toast.” That feeling doesn’t last. Your strength returns. Your smashed and dazed system recovers. After the pain of these convulsions in the market, there will be a reset. Despite the turmoil right now, profit-seeking entrepreneurialism has not disappeared overnight. That restless, human drive for innovation and progress remains intact. You don’t need an MBA to know that progress doesn’t go in a straight line. It requires zigs and zags. Experimentation. Mistakes. Creative destruction. For us, norovirus is cleared in a few days or a week, maybe. For the markets? I don’t know how long it will take. It could be months of disturbance and months more of gradual recovery. But that they will recover, of that I am certain.