Trump's announcement of a 145% tariff sparks market volatility, as U.S. inflation data indicates rising trends.

Taiwan • Business • 05/11 18:25
Trump's announcement of a 145% tariff sparks market volatility, as U.S. inflation data indicates rising trends.

On April 2, 2025, U.S. President Donald Trump announced a 145% tariff on Chinese imports and threatened to take similar measures against Mexico, the EU, and other countries, leading to global market turmoil and sparking domestic controversy in the United States. April U.S. inflation data showed an estimated 0.3% increase in core CPI, indicating the potential impact of the tariff policy on prices. This policy, led by Trump's economic advisory team, aims to bring manufacturing back to the United States and act as leverage in trade negotiations.

Key Updates

05/12 08:57

The US and China Reach Provisional Tariff Agreement in Geneva: Significant Tariff Reduction Over the Next 90 Days Aimed at Easing Trade Tensions

On May 12, 2025, after high-level economic and trade talks between the United States and China in Geneva, Switzerland, the United States and China announced a temporary 90-day tariff agreement. The United States will lower tariffs on Chinese goods from 145% to 30%, while China will lower tariffs on American goods from 125% to 10%. This move is intended to ease trade tensions and set up a framework for future economic and trade talks. Both parties committed to implementing the tariff adjustments by May 14 and suspending or canceling most retaliatory measures.

05/12 06:26

The U.S. core CPI is expected to rise in April, businesses are facing challenges in passing on tariff costs, and the slowdown in consumer spending is raising economic concerns.

The U.S. core Consumer Price Index (CPI) for April is projected to increase by 0.3%, indicating a rise in inflationary pressures. Businesses are encountering a new wave of tariff pressures and are trying to pass these costs onto consumers, but the slowing demand is limiting the effectiveness of these efforts. Retail sales data is anticipated to remain unchanged, indicating consumer anxiety about the economic outlook. The Federal Reserve has cautioned that uncertainty in trade policy could increase inflation and unemployment, posing a risk to the economy.

05/12 02:59

Director of the CBO Warns: Trump's trade policies undermine confidence in foreign investment, the status of the dollar and the sustainability of U.S. debt face challenges.

Phillip Swagel, the director of the Congressional Budget Office, stated in an interview with The Financial Times that President Trump's trade policies and tariffs have had an impact on Wall Street and could potentially affect foreign investors' confidence in U.S. assets. While a 10% tariff might reduce the deficit, its impact on market confidence and the dollar's status cannot be overlooked. With the rise in U.S. debt interest expenses, the CBO and policymakers view U.S. debt as being on an unsustainable trajectory.

05/12 01:24

The US-China trade talks wrapped up in Geneva: An agreement was reached to cut the $1.2 trillion trade deficit and set up a consultation mechanism.

On May 11, 2025, the United States and China concluded a two-day high-level economic and trade talks in Geneva, Switzerland, where they reached a consensus on several key issues. This marked the first high-level talks since President Trump imposed tariffs on Chinese goods earlier this year. The agreement aims to reduce the U.S. trade deficit by $1.2 trillion and establish a mechanism for U.S.-China economic and trade consultations. Both parties are set to release a joint statement on May 12, detailing the agreement.

05/11 22:55

The US and UK Reach a New Tariff Agreement, Talks Between the US, China, and Switzerland Begin: A Ray of Hope for the Global Trade Situation

In May 2025, the United States and the United Kingdom reached a bilateral trade agreement under a new tariff policy, which grants tariff reductions for British-made automobiles and steel products, reducing the base tariff to 10%. U.S. and Chinese officials met in Geneva, Switzerland, agreeing to set up a mechanism for economic and trade consultations, and a joint statement will be released on May 12. Market sentiment remains optimistic, U.S. Treasury yields have remained stable, and the Federal Reserve kept interest rates unchanged at its May 7 meeting, with the benchmark rate range at 4.25% to 4.50%.

05/11 18:25

Trump's announcement of a 145% tariff sparks market volatility, as U.S. inflation data indicates rising trends.

On April 2, 2025, U.S. President Donald Trump announced a 145% tariff on Chinese imports and threatened to take similar measures against Mexico, the EU, and other countries, leading to global market turmoil and sparking domestic controversy in the United States. April U.S. inflation data showed an estimated 0.3% increase in core CPI, indicating the potential impact of the tariff policy on prices. This policy, led by Trump's economic advisory team, aims to bring manufacturing back to the United States and act as leverage in trade negotiations.

05/11 14:25

An Experiment by American Small Business Owners Reveals Consumer Willingness to Pay High Prices for "Made in USA" Products: Results That Give Food for Thought

Afina Showerhead Filter founder Ramon van Meer tested if consumers are willing to pay more for products "Made in USA" amid US-China trade tensions. He sold two identical products on his website, one priced at $129 made in China and the other at $239 made in the USA. The results showed that 584 customers opted for the China-made version, while no one purchased the USA-made version, indicating that consumers are not willing to pay extra to support American manufacturing. Van Meer plans to shift production to other Asian countries to cut costs.

05/11 03:53

Thaw in US-China Trade War: Geneva Talks Begin, Four Major Sectors in the Taiwan Stock Market Preparing for Rotation

On May 10, 2025, high-level representatives from the US and China held their first formal talks in Geneva, Switzerland, in an attempt to ease economic tensions caused by punishing tariffs. The talks, led by US Treasury Secretary Besant and Chinese Vice Premier He Lifeng, lasted eight hours and are set to continue on May 11. The Taiwan stock market showed signs of capital rotation, with four major sectors likely to be affected. Ukraine and the India-Pakistan regions announced ceasefires, easing global market sentiment.

05/10 15:02

Donald Trump's new tariff policies spark volatility in the U.S. Treasury bond market: 30-year Treasury yield jumps 50 basis points within a week

In April 2025, the U.S. Treasury bond market experienced significant volatility due to a new round of high tariff policy announced by Trump on April 2. The 30-year Treasury yield surged nearly 50 basis points in a single week, marking the largest increase since 1987. Perry, the manager of SOMA at the New York Federal Reserve Bank, pointed out that the large-scale closing of "swap spread trades" by leveraged investors was one of the primary reasons for the abnormal spike in yields. The Trump administration subsequently delayed some of the tariff measures, and the Federal Reserve increased liquidity support to stabilize the market.

05/10 11:29

Sino-American trade talks in Geneva halted: Chinese delegation abruptly withdrew from the venue

On May 10, 2025, high-level economic and trade negotiations between the US and China were held in Geneva, Switzerland. The Chinese delegation abruptly left the venue, causing the talks to be interrupted, and the US representatives subsequently left as well. This meeting marked the first formal engagement between the two sides since the escalation of high-tariff tensions, aimed at finding a way to ease tensions. Both parties had previously expressed openness to dialogue, but the sudden turn of events cast doubt on the future of the negotiations.

Trump's Tariff Policy: Content and Background

On April 2, 2025, the Trump administration officially launched the so-called "Day of Liberation" tariff plan, imposing tariffs of up to 145% on Chinese imports, setting a new record high. According to Park Jong-hoon, author of the book "Trump 2.0 Era," this policy is an extension of Trump's "America First" policy, aimed at forcing manufacturing back to the United States and to use as leverage in trade negotiations.

Trump's tariff policy was led by his core team of economic and trade advisors, including former White House trade advisor Peter Navarro, trade representative Jamieson Greer, chairman of the Council of Economic Advisers Stephen Miran, and Secretary of Commerce Howard Lutnick. According to former National Security Council official Weinstein, Navarro was one of the main architects of the policy and worked closely with other senior officials to formulate specific measures.

During his campaign, Trump promised to impose a 60% tariff on China, 100% on Mexico, and 20% on all other countries. The implementation of the 145% tariff exceeded initial expectations, indicating a further hardening of his policy stance. Trump also stated that tariff revenue could replace income tax, although this claim was criticized by many economists as "mathematically unfeasible."

Market and Political Reactions to the Tariff Policy

Trump's tariff policy immediately triggered an intense reaction in global markets. Stock markets around the world saw significant declines, and the dollar index also weakened significantly. According to a Substack column report, the dollar has fallen 10% since January, reaching its lowest level in three years. Foreign investors started to reduce their holdings of U.S. Treasury bonds and turned to Asian currencies and gold as safe-haven assets.

Domestically in the United States, the tariff policy also sparked political controversy. California Governor Gavin Newsom publicly criticized the federal government's tariff policy, stating that it led to a significant drop in import volumes at California ports, with imports at Southern California ports down 35% and the overall number of scheduled incoming cargo ships plummeting by 60%. Newsom warned that if the policy continues, consumers may face "bare shelves," and even if the policy is reversed, it would take months to restore the supply chain.

Additionally, Japanese Prime Minister Shigeru Ishiba expressed strong dissatisfaction with Trump's tariff policy, demanding that the U.S. fully withdraw auto tariffs and refusing to accept domestic security standards as a bargaining chip. The Japanese side stated that even if the reciprocal tariff suspension period expires on July 9, they will not easily compromise.

U.S. Inflation Data Shows Signs of Heating Up

Almost simultaneously with the tariff policy, U.S. inflation data for April showed signs of rising price pressures. According to forecasts by Bloomberg and Markets.com, the annual growth rate of the core CPI in April is expected to reach 2.6%, higher than March's 2.4%. The monthly growth rate is estimated at 0.3%, indicating continued increases in service and housing costs.

The Federal Reserve (Fed) maintained interest rates unchanged on May 7, but Chairman Jerome Powell emphasized at a press conference that there is "no rush to cut rates," pointing out that inflation and unemployment risks are rising simultaneously, and the economy is at risk of stagflation. Powell mentioned "observe" and "wait" 22 times during the meeting, indicating the Fed's cautious attitude towards the current economic situation.

According to analysis by Wall Street Journal reporter Nick Timiraos, the Fed is currently closely monitoring the transmission effects of the tariff policy on prices. Although the CPI unexpectedly fell by 0.1% in March, analysts generally believe that this trend is unlikely to continue, especially after the full implementation of the tariff policy.

Interplay Between Tariffs and Inflation

According to reports from Bloomberg and Swissinfo, although the direct impact of tariffs on the CPI has not yet fully manifested, manufacturers and service providers are already facing rising upstream costs, which may be passed on to consumers in the coming months. The Producer Price Index (PPI) for April is expected to increase by 3.1% annually, reflecting accumulating price pressures at the wholesale level.

Furthermore, dollar depreciation has exacerbated the price increase of imported goods. Substack reports indicate that the weak dollar has led to higher costs for U.S. consumers purchasing imported goods, with some products seeing price increases of up to 20%. This has a direct impact on low- and middle-income households, as imported goods account for a relatively high proportion of their consumer spending.

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