US-China Trade War Intensifies: Foreign Investors Downgrade China's Economic Outlook, Nomura Overhauls Its Operations in China
In April 2025, President Trump of the United States increased tariffs on Chinese goods to 145%, and China responded with a retaliatory tariff of 125%, escalating the U.S.-China trade war. This move impacted global markets, with UBS and Goldman Sachs lowering their forecasts for China's 2025 GDP growth to 3.4% and 4%, respectively. Nomura Holdings reduced its wealth management division in China and shifted its focus to brokerage and asset management. The tariff standoff between the U.S. and China affected China's economy and the layout of foreign investments, and had profound implications for the global economy.
Key Updates
04/15 06:23
US-China Trade War Intensifies: Foreign Investors Downgrade China's Economic Outlook, Nomura Overhauls Its Operations in China
In April 2025, President Trump of the United States increased tariffs on Chinese goods to 145%, and China responded with a retaliatory tariff of 125%, escalating the U.S.-China trade war. This move impacted global markets, with UBS and Goldman Sachs lowering their forecasts for China's 2025 GDP growth to 3.4% and 4%, respectively. Nomura Holdings reduced its wealth management division in China and shifted its focus to brokerage and asset management. The tariff standoff between the U.S. and China affected China's economy and the layout of foreign investments, and had profound implications for the global economy.
US-China Tariff War Fully Escalates as Tariffs Reach Historic Highs
In early April 2025, President Trump of the United States announced tariffs as high as 145% on imports from China, covering semiconductors, electronics, smartphones, and laptops. In response, China officially increased retaliatory tariffs on US goods to 125% on April 12. According to a report by BBC Chinese, China's Ministry of Commerce stated that if the US continues to "substantially infringe on China's interests," China will "accompany to the end."
Despite the US announcing temporary exemptions for some electronic products on April 11, US Commerce Secretary Howard Lutnick emphasized that these exemptions are only short-term measures and revealed that the government is preparing to launch a national security tariff investigation targeting semiconductors and the entire electronics supply chain. Trump himself stated on social media that these products are "just being moved to different tariff buckets," denying a full exemption.
UBS and Goldman Sachs Lower China's GDP Growth Forecast
Facing tariff pressure and weakening external demand, UBS and Goldman Sachs have both lowered their forecasts for China's GDP growth in 2025. According to reports by United Daily News and Bloomberg, UBS has lowered its 2025 GDP growth forecast for China from 4% to 3.4% and expects further slowing to 3% in 2026. The report notes that although China may introduce more stimulus measures, the policy effects are limited, and domestic investment and consumption will continue to face pressure.
UBS also predicts that China's CPI inflation rate and GDP deflator for 2025 and 2026 will be negative, indicating increased deflationary pressure. The bank believes that if the current tariff levels persist, China's GDP growth could be dragged down by more than 2 percentage points, posing unprecedented challenges to exports.
Goldman Sachs, on April 10, lowered its 2025 GDP growth forecast for China from 4.5% to 4% and its 2026 forecast from 4% to 3.5%. The Goldman Sachs research department noted that US-China trade tensions have reached unprecedented levels and could spread to strategic areas such as capital markets, technology, and geopolitics. Goldman Sachs also lowered the 12-month target points for the MSCI China Index and the CSI 300 Index, reflecting a blow to market confidence.
Nomura Adjusts China Business Focus to Asset Management and Brokerage
Amid slowing economic growth and rising market uncertainty in China, Nomura Holdings is also adjusting its business strategy in China. According to reports by Bloomberg and United Daily News, Nomura has significantly reduced its wealth management division in China, cutting about two-thirds of its workforce in the past two years, and is seeking a new CEO for its joint venture, Nomura Orient International Securities.
Nomura stated that it will prioritize the development of asset management and research businesses in the future and expand its sales and trading operations in mainland China. The company emphasized that it will continue to reassess its business but did not comment on personnel changes or employee numbers. Since its establishment in 2019, Nomura Orient International Securities has incurred annual losses, and this adjustment is seen as a major shift in its China market strategy.
Short-term Export Surge, Long-term Pressure Remains
Despite increasing tariff pressure, China's exports in March saw a short-term surge. According to a report by the New York Post, China's exports in March grew by 12.4% year-on-year, reaching $313.9 billion, while imports fell by 4.3%, resulting in a trade surplus of $102.6 billion. Analysts pointed out that companies rushed to ship goods before the new US tariffs came into effect, leading to the short-term export spike.
However, an ING economic research report indicated that this "front-loading" effect is unlikely to be sustained, and direct US-China trade is expected to decline significantly starting in April. The disruption of China's exports to the US could result in a GDP loss of up to 3%, with Bloomberg Economics estimating that total exports could decrease by 10% this year.
Labor Market and Consumer Confidence Under Pressure
Goldman Sachs noted that the extremely high US tariffs will put tremendous pressure on China's labor market, estimating that up to 20 million people (about 3% of China's workforce) could be affected by reduced exports to the US. The job vacancy index from QuantCube Technology shows that online job postings in China have fallen nearly 30% over the past two months compared to the same period last year. A survey by the Cheung Kong Graduate School of Business also showed that the corporate hiring plan index fell to its lowest point in six months in March.
In terms of consumption, a survey by Morning Consult indicated that Chinese consumer sentiment in early 2025 has weakened compared to last year. Although the government has stated it will shift to stimulating consumption, current policy efforts remain limited, and household confidence has yet to show a significant recovery.
Lee Hsien Loong: Tariff War Stifles US-China Cooperation
Singapore's Senior Minister Lee Hsien Loong stated on April 14th that the US-China tariff war has severely damaged bilateral trade and cooperation. He pointed out that extreme tariff measures have stalled commercial activities, affecting cooperation on other important issues such as fentanyl control. He emphasized that the US's tough stance on China has become a bipartisan consensus, and this conflict will have far-reaching impacts on the global economy and the multilateral trading system.
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