US-China trade tensions cause market vol., IMF downgrades growth

Rumors about increased US tariffs on China circulated last Thursday, but the White House denied these claims.

The US aimed to isolate China by pressuring other nations to restrict Chinese goods through their borders; however, recent reports indicate that Japan has withdrawn from trade negotiations with the US without reaching an agreement.

US Federal Reserve Chairman Jerome Powell warned that Trump's tariff strategy could lead to higher inflation and unemployment, limiting the Fed’s ability to mitigate these effects, causing significant market volatility on Monday as the Dow declined by 1250 points.

Gold prices surged by almost 3% ($100/ounce) to $3400, reflecting increased investor uncertainty and a flight-to-safety trend; however, gold prices dropped nearly 4% overnight after news that Trump might lower tariffs on Chinese goods.

Treasury Secretary Scott Bessent indicated today that there will be a de-escalation in the trade war with China, though he noted it could take years for full resolution; this announcement led to a 1000-point increase in the Dow as of Wednesday morning, but the DJIA is now up about 500 points after Trump's signals that he might seek a trade deal.

The IMF has downgraded its FY25 global growth estimate from 3.3% to 2.8%, citing Trump's tariffs as dramatically slowing global economic growth, and reduced the Philippines' FY25 economic growth forecast from 6.1% to 5.5%.