U.S.-China Trade War Escalates: U.S. Treasury Secretary Criticizes China's Mistakes, Volatility Index (VIX) Soars to 60, Sparking Market Panic

Taiwan • Business • 04/08 15:10
U.S.-China Trade War Escalates: U.S. Treasury Secretary Criticizes China's Mistakes, Volatility Index (VIX) Soars to 60, Sparking Market Panic

On April 8, 2025, U.S. President Donald Trump announced a comprehensive tariff policy, causing turmoil in global financial markets. U.S. Treasury Secretary Scott Besant criticized China's retaliatory tariffs, stating that China is at a disadvantage in the trade war. Euronext CEO Stéphane Boujnah warned that U.S. policy makes the U.S. resemble an emerging market, leading to capital outflows. The VIX, the U.S. stock market's fear index, surged above 60, hitting its highest level since 2020, and market experts urged for policy measures to stabilize investor confidence.

Key Updates

04/08 22:09

The US-China trade war heats up: The US imposes a 104% tariff on Chinese goods, leading to significant fluctuations in US stocks; China responds by cutting reserve requirements and interest rates.

On April 9, 2025, the United States imposed a 104% total tariff on Chinese goods, escalating U.S.-China trade tensions and causing fluctuations in global markets. U.S. stocks were highly volatile that day, with the Dow Jones Industrial Average dropping 320 points. The Chinese government swiftly responded by devaluing the yuan, lowering reserve requirements and interest rates, and implementing housing market stabilization policies to support the economy. Concerns over a global economic recession intensified, as JPMorgan raised the recession probability to 60%.

04/08 20:40

Former President Donald Trump Announces Global Mutual Tariff Policy, Analysis Reveals It Is Not Truly Mutual

On April 2, 2025, former U.S. President Donald Trump announced a global "reciprocal tariffs" policy at the White House, describing it as a move to achieve trade fairness. However, according to data from the WTO and analyses by economists, these tariffs do not truly adhere to the principle of reciprocity but are based on bilateral trade deficits, imposing tariffs on multiple countries that are higher than the rates those countries impose on the U.S. This policy has sparked criticism for deviating from traditional reciprocal trade principles and has been accused of being aimed at eliminating the U.S. trade deficit.

04/08 19:08

The United States imposes a 26% tariff on goods from India, Taiwanese businesses temporarily halt shipments to the United States, while the domestic market in India bolsters confidence.

On April 3, 2025, U.S. President Donald Trump announced a 26% import tariff on Indian goods, impacting Taiwanese companies that have factories in India, leading some Taiwanese businesses to temporarily halt shipments to the U.S. India's strong domestic market supports the operations of these Taiwanese businesses. The Indian government has decided not to take retaliatory measures and is actively negotiating with the U.S. to pursue a bilateral trade agreement. The Indian Minister of Commerce and Industry convened a meeting to address the tariff impact, making bilateral trade negotiations a key area of focus for future developments.

04/08 18:09

Trump's Tariff Policies Trigger a 2025 US-China Trade War: Taiwanese Manufacturers Adjust Strategies, Apple Moves Production to India

In April 2025, U.S. President Donald Trump announced punitive tariffs of up to 104% on Chinese goods, sparking a new round in the U.S.-China trade war. China immediately retaliated with countermeasures, disrupting global supply chains and shaking market confidence. Taiwanese contract manufacturers shifted their operations to Vietnam and Mexico, and Apple accelerated its shift of iPhone production to India. A buying frenzy for PCs and iPhones broke out in the U.S. market as consumers feared imminent price hikes, leaving businesses and investors facing uncertainty.

04/08 16:40

Trump's tariff policy for 2025 sparks a buying frenzy across the US, and Thai restaurants are facing high cost pressures.

On April 2, 2025, President Trump of the United States announced a baseline tariff of 10% on all imported goods and imposed a maximum punitive tariff of 104% on countries such as China, resulting in a buying frenzy among American consumers. Prices of food, appliances, and clothing are expected to increase by 10% to 30%, and Thai restaurants are facing a 36% tariff pressure due to imported ingredients. This policy has caused market uncertainty, an increase in import costs for businesses, increased consumer spending, and sparked controversy over the formula used to calculate the policy.

04/08 15:10

U.S.-China Trade War Escalates: U.S. Treasury Secretary Criticizes China's Mistakes, Volatility Index (VIX) Soars to 60, Sparking Market Panic

On April 8, 2025, U.S. President Donald Trump announced a comprehensive tariff policy, causing turmoil in global financial markets. U.S. Treasury Secretary Scott Besant criticized China's retaliatory tariffs, stating that China is at a disadvantage in the trade war. Euronext CEO Stéphane Boujnah warned that U.S. policy makes the U.S. resemble an emerging market, leading to capital outflows. The VIX, the U.S. stock market's fear index, surged above 60, hitting its highest level since 2020, and market experts urged for policy measures to stabilize investor confidence.

04/08 14:43

Trump's flawed tariff policy triggers backlash from U.S. companies: Apple moves iPhone production to India, reconstruction costs in Los Angeles skyrocket

In April 2025, former U.S. President Trump announced the implementation of "reciprocal tariffs" on multiple countries, with rates ranging from 10% to 54%. The American Enterprise Institute pointed out that the White House used an incorrect formula, causing the rates to be overestimated by a factor of four, leading to a backlash from businesses. Apple plans to produce 25 million iPhones in India to reduce costs; toy company BasicFun is facing pressure to raise prices. Reconstruction efforts after the Los Angeles wildfires have become more costly due to increased lumber tariffs.

04/08 13:12

An American think tank has revealed a tariff miscalculation by the Trump administration: The actual tariff rate for Taiwan, Japan, and South Korea should be 10%. The EU urges negotiations between the US and China to resolve trade disputes.

On April 2, President Trump of the United States announced the imposition of "reciprocal tariffs" on several countries around the world. However, Brent Neiman, an economist from the American Enterprise Institute and the University of Chicago, revealed that the Trump administration made errors in tariff calculations, resulting in the tariff rates for countries like Taiwan, Japan, and South Korea being overestimated by four times, when they should actually be 10%. European Commission President Ursula von der Leyen and Chinese Premier Li Qiang had a call, urging the resolution of trade disputes caused by U.S. tariffs through negotiations and expressed support for a fair and free international trade system.

04/08 12:44

U.S. Tariff Policy Affects Taiwanese Products: Prices of Taiwanese Soy Sauce Soar, Taiwanese Companies Look to India for Solutions

Beginning April 9, 2025, the United States will impose a 32% tariff on Taiwanese goods, affecting Taiwanese exporters. Due to the tariff, the price of Taiwanese soy sauce in the U.S. has risen from 210 NTD to nearly 300 NTD, and the bubble tea brand COMEBUY TEA is planning a 10% price increase. Some Taiwanese businesses are considering moving their production bases to India to cut down on taxes and transportation costs. The Taiwanese government has launched a contingency plan, encouraging companies to increase their investments in the U.S. and explore diverse market strategies to lessen reliance on the U.S.

04/08 11:39

Trump's tariff policies have severely impacted the Taiwanese-invested textile industry in Vietnam, and businesses are urging the Taiwanese government to negotiate for tariff reductions.

On April 9, 2025, U.S. President Donald Trump initiated the "Reciprocal Tariff" policy, imposing tariffs of 46% on goods from Vietnam and 54% on goods from China. This severely affected Taiwanese textile manufacturers with factories in Vietnam, leading to order cancellations, shipment delays, and factory shutdowns. The industry is urging the Taiwanese government to speed up negotiations with the U.S. to negotiate for tariff reductions or relief measures to ease the burden on the supply chain.

US Treasury Secretary: China "Holding a Weak Hand"

Amid the rapidly escalating US-China trade war, US Treasury Secretary Bessent candidly stated during an interview on CNBC's "Squawk Box" on April 8 that China is "holding a weak hand" in this tariff standoff, describing its situation as extremely disadvantageous. He pointed out that US exports to China are only one-fifth of China's exports to the US, thus China's retaliatory tariffs have limited real impact on the US.

Bessent emphasized, "We are a country with a trade deficit, they are a country with a trade surplus. This means they are more dependent on our market." He believes that China's economic model is overly reliant on exports, and domestic consumption has not been effectively stimulated, leaving it with insufficient buffer space when facing US tariff pressure.

Additionally, Bessent revealed that the US government has initiated trade negotiations with over 70 countries, with Japan being a priority. He stated, "If other countries can propose feasible suggestions, we can reach some good agreements." He also added that some tariffs might remain unchanged to create jobs and revenue.

Euronext: US Policy Exhibiting "Emerging Market Characteristics"

In Europe, Euronext CEO Boujnah expressed strong concerns about US trade policy during an interview with France Inter. He noted that since the Trump administration implemented comprehensive tariffs, global financial markets have been in turmoil, and investor confidence in the US has significantly declined.

Boujnah bluntly stated, "This country (the US) has changed beyond recognition, and we are in a transitional period. The US now resembles an emerging market rather than a developed country." He pointed out that investors find it difficult to understand the US's constantly changing policies, and this uncertainty is spreading through the system, putting pressure on global capital flows.

He added that some European investors have begun transferring physical assets like gold from the US to Europe, seeking a more stable property and policy environment. Boujnah believes this capital shift reflects deep-seated market concerns about the direction of US policy.

Fear Index Soars: VIX Breaks 60 Triggering a Crisis Alert

The market turmoil triggered by US tariff policy is also reflected in the Volatility Index (VIX). According to data from the Chicago Board Options Exchange, the VIX index surged to 60.13 on April 7, reaching its highest level since the 2020 COVID-19 pandemic. The index is considered "Wall Street's fear gauge" and typically spikes during periods of extreme market anxiety.

Nicholas Colas, co-founder of DataTrek Research, noted that a VIX index closing above 40 is extremely rare, having occurred only a few times since 1990, including during the 1998 LTCM crisis, the 2008 financial crisis, and the 2020 pandemic outbreak. He stated, "Such data usually indicates a crisis requiring immediate policy response."

Market analysts believe the VIX surge reflects investors' high uncertainty about the direction of US policy. A Saxo Bank report indicated that VIX futures contracts show the market expects high volatility to persist into the summer, indicating that the market has not yet absorbed policy risks.

Market Reaction: Stock Plummet and Capital Outflow

As the VIX soared, major US stock indices experienced sharp fluctuations. S&P 500 futures once fell 2.6%, and Nasdaq futures dropped 2.9%. According to Reuters, since Trump's tariff policy announcement, the US stock market has lost over $6 trillion in value.

Additionally, according to reports from Euronext and Bloomberg, global stock markets were also affected. Asian stock markets recorded their largest single-day drop since 2008, and the European Stoxx 600 index once plummeted over 6%. The Hong Kong Hang Seng Index fell into bear market territory, and Taiwan stocks also plummeted nearly 10% after opening.

In terms of capital flow, investors turned to safe-haven assets like gold and US Treasury bonds, and some funds were shifted to European markets. Euronext noted that Europe attracted more capital inflow due to stable property rights and predictable policies.

Intertwined Pressures of Policy and Market

Amid the market's intense reaction, there are also calls for policy reconsideration within the US. According to Politico, Treasury Secretary Bessent attempted to persuade Trump to focus on negotiations to avoid a stock market crash. The US Chamber of Commerce is also considering suing over the new tariff policy, questioning its legality.

Nevertheless, Trump remains steadfast in his tariff stance, stating that "tariffs will make the country very wealthy," emphasizing that this is a necessary means to revitalize the US industrial base. White House officials revealed that if China does not withdraw its retaliatory tariffs, the US will impose an additional 50% tariff, bringing the total rate to 104%.

References

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