The US-China trade war is no longer a bilateral issue—it’s a global crisis in the making. Failure to reach a deal could trigger far-reaching economic turmoil across continents.
The trade war is threatening to spiral out of control for Trump.
What began as a bilateral standoff between the U.S. and China now poses a serious threat to the global economic system, potentially ensnaring Europe and other key players.
The tit-for-tat escalation of tariffs—some now surpassing 125% and nearing 145%—has already rattled markets, eroded investor confidence, and shaken even the most resilient economies. The consequences are already unfolding: heightened volatility in equity markets, strain in the bond space, and early signs of a contraction in global trade flows.
If the trade conflict continues unchecked and no compromise is reached, the ripple effects could hit businesses, consumers, and entire regions. The European Union, for instance, is concerned about a flood of Chinese exports originally destined for the U.S. being redirected to its markets.
Meanwhile, American multinationals—such as Apple and Walmart—are grappling with severe operational and financial disruptions. Against this backdrop, forging a viable US-China agreement is no longer just a strategic goal; it is an economic imperative. Here’s what’s at stake if a deal remains elusive:
US-China trade war: urgent need to find an agreement
Strategists at Nordea (a Northern European financial services group) emphasize the urgency: brokering a deal between the U.S. and China has become paramount to avert a trade crisis on a global scale. The tariff war is escalating erratically, with duties imposed and reversed within days, and policy announcements blindsiding markets—sending indexes plunging or surging within hours.
The Trump administration’s erratic trade moves have created a climate of deep uncertainty. The 90-day suspension of tariffs—excluding China—has only exacerbated tensions. According to Nordea, the absence of a credible resolution raises the risk of a full-blown trade blockade between the world’s two largest economies. A weakening dollar and heightened bond market volatility underscore waning confidence not only in U.S. trade policy, but in the broader global economic framework.
The impact is already tangible: companies are delaying investment decisions, supply chains are in disarray, and trade volumes are declining. Without a near-term resolution, fears of a trade paralysis are mounting. While Trump projects optimism, markets appear unconvinced. At the same time, Xi Jinping has signaled that China is prepared to hold its ground—yet collateral damage is beginning to spread beyond the primary actors. A temporary customs agreement, however modest, increasingly appears to be the only viable option to halt a conflict from which no one emerges a winner.
What happens if the US and China do not reach an agreement on tariffs: the risks for the EU
Failure by the United States and China to reach a trade agreement would trigger profound and long-lasting global economic repercussions. The first and most immediate effect: a sharp increase in prices for consumers. In the U.S., a significant portion of consumer goods—particularly electronics and apparel—originates from China. With tariffs exceeding 125%, these items will rapidly become more expensive and harder to source. Alternatives exist but are typically pricier or inferior in quality. Suppliers are also expected to raise prices, exploiting increased demand.
But the impact won’t stop at American households. Major U.S. corporations reliant on Chinese manufacturing—like Apple and Walmart—will face cost pressures, operational challenges, and potential job cuts. Retail prices are likely to rise, further dampening competitiveness. Simultaneously, China, shut out of the U.S. market, may look to redirect its exports to Europe, creating a disruptive oversupply and exerting downward pressure on European industries.
The European Union is already bracing for such a scenario. An influx of low-cost imports could undermine domestic producers and spark a new wave of protectionism. Furthermore, the economic tension could bleed into adjacent sectors such as technology and finance. A global recession is no longer a remote possibility—sustained trade conflict could shatter market confidence, drive investors toward safe-haven assets, and significantly decelerate global growth.
Developing countries, whose economies rely heavily on international trade, would be particularly vulnerable. A breakdown in U.S.-China negotiations could unleash a perfect storm: zero growth, high inflation, and market fragmentation. Many analysts warn that such a scenario could rewind global economic progress by decades.
Original article published on Money.it Italy 2025-04-13 10:40:00. Original title: Cosa succede se Usa e Cina non raggiungono un accordo sui dazi
