China Weighs Tariff Pause on U.S. Goods as Trade War Hits Critical Industries

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Political

China–U.S. Trade War

Economic

Summary:

China is considering suspending its 125% tariffs on select U.S. goods, including medical equipment and industrial chemicals, mirroring recent U.S. concessions and highlighting the deep economic interdependence between the two global powers...

Potential tariff relief reflects pragmatic recalibration

Amid escalating trade tensions, Beijing is reportedly reviewing the possibility of temporarily suspending its punitive 125% tariffs on select U.S. imports. According to sources close to internal policy discussions, exemptions may include high-tech medical equipment and critical industrial chemicals such as ethane, which remains an essential input for China’s petrochemical industry despite the country's status as the world’s largest plastics producer.

This policy shift suggests a strategic recalibration by China as trade conflict pressures begin to strain its own critical sectors. The causal relationship is apparent: steep tariffs imposed for geopolitical leverage are now threatening the operational viability of industries that depend on advanced foreign technology and specialized raw materials.

Echoes of U.S. flexibility signal tentative de-escalation

China’s move comes in the wake of a notable policy gesture by Washington, which recently exempted several categories of electronics from the 145% tariffs it had imposed on Chinese goods. This reciprocal easing signals mutual recognition of the economic damage that unrestrained protectionism could inflict on foundational sectors—from healthcare to aerospace to consumer electronics.

The synchronized nature of these tariff reconsiderations reveals a clear correlation between policy relaxation and shared industrial exposure. In industries such as aviation, where most Chinese airlines lease aircraft from international lessors, new tariffs would impose unsustainable financial burdens. The possible exemption of aircraft leasing fees from tariffs underscores the structural interconnectedness of both economies.

Implications for tech and semiconductor supply chains

Leaked documents and industry discussions suggest that China is also considering exemptions for semiconductors and essential chemicals used in chip manufacturing. While the details remain unconfirmed, insiders note that at least eight product categories related to semiconductor production may be removed from the tariff list. Notably, core memory chips—where U.S. firm Micron Technology is a key global player—are still excluded from consideration, revealing the selective and strategic nature of Beijing’s exemption list.

This tentative exclusion of memory chips may reflect a broader tactic: shielding industries with high domestic reliance on U.S. tech while keeping leverage in negotiations. The nuanced approach suggests that tariff suspension is not a wholesale retreat, but a carefully calibrated move aimed at preserving industrial stability without forfeiting diplomatic leverage.

Business community awaits clarity amid fragile outlook

Chinese authorities, including the Ministry of Finance and General Administration of Customs, have yet to comment publicly on the proposed exemptions. However, companies in affected industries have reportedly been asked to submit the tariff codes of products they wish to have exempted, indicating active policy preparation. For now, major corporations—particularly in sectors like aviation, electronics, and chemicals—are closely monitoring developments for operational clarity.

Despite these signs of partial flexibility, formal trade negotiations between the U.S. and China remain stalled. Beijing has reiterated its demand that Washington lift all unilateral tariffs before it returns to the negotiation table. Meanwhile, the business community is navigating uncertainty, hopeful that the dual signals of tariff easing could open the door to broader de-escalation talks.

Fragile detente amid industrial strain

As mutual tariff escalations threaten key sectors in both countries, China’s possible suspension of select 125% duties marks a critical, albeit cautious, step toward economic damage control. This measured concession—mirroring U.S. moves to exclude certain electronics—underscores the limits of prolonged economic confrontation when vital industrial ecosystems are at stake.

Yet, the selective nature of the exemptions also reflects enduring strategic rivalry. Rather than a full truce, both Washington and Beijing appear to be signaling temporary relief aimed at shielding essential sectors while preserving leverage for future bargaining. The coming weeks will test whether these moves evolve into meaningful dialogue—or remain isolated acts of economic self-preservation in an otherwise frozen conflict.

Source: Bloomberg

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Glendon

Economic

Forex

Distress among the UK’s most consumer-facing sectors has surged as they bear the brunt of lower spending and weaker confidence, according to a report by the consultant Begbies Traynor.

In a clear sign that the UK economy has been weakening, almost two-thirds of the sectors covered in the report witnessed a double-digit percentage increase in “critical” financial distress over the past 12 months.

Those most exposed to the UK consumer have seen the steepest deterioration in financial health. Among bars and restaurants, “critical” financial distress jumped 31% year-on-year in the first quarter of 2025, while the travel and tourism industry experienced a near 26% rise.

“These sectors, which are notorious for operating on tight margins, are bracing themselves for further economic fallout from both domestic tax increases and US tariffs, which could push many over the edge,” said Julie Palmer, a partner at Begbies Traynor.

Begbies Traynor identifies companies in distress using a scoring system, screening companies for a sustained or marked deterioration in key financial ratios and indicators. These include working capital, contingent liabilities, retained profits and net worth.

Source: Bloomberg Europe

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Gerik

Bond

China–U.S. Trade War

Fiscal firepower unleashed as trade tensions escalate

In a bold move to reinforce its economy under pressure from U.S. tariff hikes, China has launched the first wave of its special sovereign bond program for 2025. On April 24, Beijing began issuing 286 billion yuan (approximately $39 billion) in targeted bonds to support its fiscal stimulus package, originally approved in March. Unlike standard government bonds, these special instruments are earmarked for specific purposes and are excluded from the official deficit—already projected at a record 4% of GDP this year.

This issuance comes in response to the unprecedented 145% import tariff imposed by the U.S. on Chinese goods, a move that threatens to derail China’s ambition to hit a 5% GDP growth target in 2025. The correlation between trade policy shocks and fiscal countermeasures is clear: Beijing is ramping up government-led investment to offset collapsing external demand.

Bond issuance strategy reflects targeted stimulus priorities

Of the bonds issued, 165 billion yuan are in five-year notes, earmarked to recapitalize state-owned banks whose profits have been squeezed by weakening margins and asset quality concerns. This injection is part of a broader 500 billion yuan bond issuance plan to be completed by June 4.

Additional offerings include 50 billion yuan in 20-year bonds and 71 billion yuan in 30-year bonds, forming part of a long-term debt strategy that will see 1.3 trillion yuan in super-long bonds (20–50 years) issued through October. This exceeds the 1 trillion yuan threshold reached in 2024 and signals an expanded reliance on long-duration instruments to fund China’s growth pivot.

The bond proceeds will target infrastructure development, consumer stimulus, and industrial upgrades—three levers intended to stimulate domestic demand and reduce reliance on volatile export markets. The causal relationship here is critical: as export-led growth falters due to geopolitical friction, investment and consumption must rise to prevent systemic slowdown.

Market stability amid liquidity assurance

Despite the surge in bond supply, China’s bond markets remain remarkably stable. The 10-year government bond yield has risen only 5 basis points above its February low, indicating investor confidence that the People’s Bank of China (PBOC) will maintain adequate liquidity.

Senior ANZ strategist Zhaopeng Xing forecasts that the central bank may employ tools such as reverse repurchase operations or direct bond purchases to ensure smooth absorption of new issuance. He also points to the potential for a reserve requirement ratio (RRR) cut—a traditional monetary easing mechanism—to further support credit conditions.

This reflects a strategic coordination between fiscal stimulus and monetary policy, with PBOC positioned as a backstop to bond market volatility. The interplay between bond supply, yield stability, and central bank intervention highlights a sophisticated balancing act by Chinese authorities to sustain market confidence while expanding public expenditure.

China's evolving playbook for economic resilience

As Washington’s tariff escalation delivers a severe external blow, Beijing is executing a multifaceted response that blends aggressive fiscal expansion with cautious monetary calibration. The special bond program serves not only as an economic stimulus but as a political signal of the state’s capacity to act decisively in the face of foreign economic pressure.

While the ultimate success of these measures will depend on execution and global demand conditions, China’s willingness to exceed previous debt issuance records underscores the urgency of its domestic recovery agenda. In the broader geopolitical context, this also marks a deepening of economic decoupling between the world’s two largest economies—with fiscal policy now deployed as both shield and sword in a prolonged trade conflict.

Source: Bloomberg

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Political

China–U.S. Trade War

Economic

The exodus begins: Chinese firms retreat from the American market

The dramatic escalation of U.S. import tariffs on Chinese goods—now reaching 145%—has triggered a major disruption in global trade. Many Chinese exporters, especially those dealing in consumer goods such as coffee machines, lingerie, and sportswear, have ceased shipping to the U.S. altogether. Production schedules have been slashed to as little as three or four days per week, and some businesses have completely halted operations related to U.S. exports since early April.

This marks a clear cause-effect pattern: as tariffs increase, operational costs skyrocket, making continued presence in the U.S. market financially unsustainable. The result is an accelerated withdrawal of Chinese firms, a drastic step indicative of mounting strain on China’s manufacturing sector.

Emergency measures and economic fallout

Industry leaders such as Wang Tan, Chair of the Shenzhen Cross-Border E-Commerce Association—representing about 3,000 exporters—confirm that the situation has pushed businesses into survival mode. Companies are offloading inventory, raising prices, cutting expenses, and canceling warehousing contracts in the U.S. These actions reflect an urgent attempt to preserve liquidity and avoid deeper losses.

Retailers active on platforms like Amazon, Temu, and Shein have adopted similar tactics. One Guangzhou-based seller announced a full suspension of U.S. shipments and implemented price hikes of up to 30% on popular items to offset lost revenue. “We held an emergency meeting in late March and concluded we simply cannot hold our ground in the U.S. anymore,” said Huang Luan, the firm’s sales manager.

Ripple effects: Inflationary pressures in the U.S., factory strain in China

This abrupt pullout from the U.S. market not only disrupts supply chains but also risks driving up prices for American consumers. With fewer Chinese imports, goods may become scarcer and costlier, amplifying inflationary pressures already present in the U.S. economy. The situation underscores a tight correlation between rising trade barriers and domestic economic tension—both in the exporting and importing countries.

In China, the consequences are severe and immediate. According to the Shenzhen E-Commerce Association’s internal survey, factories are cutting output and bracing for mass layoffs. Many plants are expected to close in the coming months, particularly those with heavy reliance on U.S. orders. The chain reaction from tariff imposition to plant closures illustrates a direct and damaging feedback loop.

Pivoting to new markets: Southeast Asia and the Middle East in focus

Firms across China are now urgently seeking alternative markets. In Ningbo, a curtain manufacturer whose business is 90% U.S.-focused is redirecting sales efforts toward Southeast Asia and the Middle East. “We’ll only consider returning to the U.S. if the tariff regime is relaxed,” a sales representative noted.

The broader strategic shift reflects the dwindling belief in the U.S. as a viable long-term market. As tariffs jumped from 54% to 125% and now 145%, many exporters concluded that withdrawal was not just prudent—but necessary for survival. “Continuing under these conditions would only bring about a faster demise,” Wang Tan stated.

The global consequences of a tariff war intensify

What began as a policy tool to reshape trade relations has quickly become a full-blown disruption with global consequences. For China, the U.S. tariff shock is dismantling export-reliant business models and threatening industrial stability. For the U.S., reduced imports may contribute to inflation and product shortages.

The cascading impacts across labor markets, trade corridors, and financial stability suggest that the 145% tariff policy is not merely economic leverage—it is a destabilizing force with implications far beyond bilateral politics. Unless policy shifts occur, both countries may face deeper economic wounds, with the global economy caught in the crossfire.

Source: The Strait Times

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Economic

Brazil assumes leadership role amid expanded BRICS structure

On April 28–29, the foreign ministers of BRICS countries will gather in Rio de Janeiro for a pivotal summit focused on shaping the bloc’s strategic direction under Brazil’s rotating chairmanship. The meeting, followed by a high-level security dialogue in Brasília on April 30, signals a renewed momentum within the expanded BRICS framework, which now includes 11 member states after its significant enlargement in January 2024.

According to Russian Ambassador to Brazil Alexey Labetsky, Brazil has energetically embraced its leadership role, continuing the proactive trajectory initiated by Russia in 2024. Labetsky praised Brazil’s agenda alignment with Russia’s previous presidency, including the emphasis on key global concerns like health, artificial intelligence, climate change, and financial reform—fields where consensus among members is building.

Strategic themes and institutional ambitions in focus

In addition to the ministerial summit, a series of expert-level discussions are concurrently being held in Brasília, with themes spanning environmental protection and the ethical governance of AI technologies. These technical consultations are helping shape the groundwork for long-term cooperation, institutional resilience, and potentially the establishment of common BRICS regulatory frameworks.

One of the core objectives of Brazil’s chairmanship is to accelerate the institutional development of BRICS. As Ambassador Labetsky noted, Brazil has signaled a commitment to deepening the bloc’s cohesion following the precedent set by the Kazan Declaration in 2024. This includes improving coordination structures, policy alignment mechanisms, and advancing operational integration among both new and original members.

Post-expansion dynamics and geopolitical recalibration

The upcoming meetings come at a time of substantial change for the organization. Since the January 1 expansion that welcomed Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE, the BRICS grouping has further widened its network of strategic partners. Nations like Belarus, Bolivia, Malaysia, and Uzbekistan have joined as observers or dialogue partners, while Indonesia became a full member on January 6. Most recently, Nigeria was designated as the next formal partner, continuing the bloc’s southward and multipolar expansion.

This widening footprint has turned BRICS into a significant alternative platform for countries seeking multipolar engagement outside traditional Western-led institutions. It also brings growing internal diversity, which the April summits aim to reconcile through stronger institutional frameworks and a clearer policy agenda.

Security, diplomacy, and the pursuit of balance

The meeting on April 30 in Brasília, featuring senior officials responsible for national security, underscores the bloc’s intent to broaden its influence beyond economic coordination. As regional and global security challenges grow more complex—from AI governance to geopolitical tensions in the Middle East and Eastern Europe—BRICS is exploring how to collectively respond with more strategic coherence.

Previous meetings in February and March—featuring deputy foreign ministers and Middle East policy coordinators—have already laid the groundwork for coordinated geopolitical dialogue. The continuity and intensification of such exchanges reflect the group’s efforts to become a more structured diplomatic force.

As Brazil prepares to host back-to-back BRICS meetings in Rio de Janeiro and Brasília, the bloc stands at a strategic inflection point. The shift from symbolic expansion to substantive institutionalization requires a delicate balance of inclusivity, alignment, and governance capacity. Brazil’s leadership in 2025 could determine whether BRICS evolves into a more coherent geopolitical force or struggles under the weight of its expanded diversity. What unfolds at the Rio summit may mark the beginning of a new phase for the global South’s most prominent multilateral alliance.

Source: TASS

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Bond

Strategic shift in UK debt issuance to counter fiscal strain

On April 23, the UK Debt Management Office (DMO) announced significant adjustments to the country’s government bond issuance strategy in response to a worsening fiscal outlook. The move follows fresh data from the Office for National Statistics (ONS), which revealed that the public sector borrowing requirement for fiscal year 2024–2025 had surged to £151.9 billion ($202.1 billion), exceeding the Office for Budget Responsibility’s (OBR) March forecast by £14.6 billion.

The updated deficit figure amounts to 5.3% of GDP, marking a 0.5 percentage point increase from the previous fiscal year and ranking as the eighth-highest since the 2008–2009 global financial crisis. The decision to restructure bond issuance reflects the government’s attempt to manage elevated borrowing needs while mitigating exposure to rising long-term interest rates.

Rebalancing toward shorter maturities to lower financing risk

In response to market pressures, the DMO is scaling back its long-term gilt issuance while expanding short-term debt sales. Specifically, net sales of Treasury bills for FY2025–2026 will increase by £5 billion to £10 billion. Meanwhile, total gilt issuance will slightly decline by £0.1 billion to £299.1 billion. Most notably, issuance of long-term gilts—defined as bonds with maturities over 15 years—will decrease by £10.4 billion, bringing the total to £29.8 billion. This will reduce long-term gilts to just 10% of all issuance, the lowest share in 35 years.

Conversely, short-term gilt issuance (3–7 years maturity) will be raised by £7 billion to £117.9 billion. Medium-term and index-linked gilt issuance will remain unchanged, while an additional £3.3 billion will be allocated to unallocated tranches, where maturity dates are to be confirmed based on market conditions.

This shift reflects a correlation, if not causation, between market interest rate volatility and issuance maturity strategy. By favoring shorter-term debt, the UK government is reducing its immediate interest rate exposure while retaining flexibility to adapt to evolving market dynamics.

Market response and macro-financial context

The realignment in bond strategy came amid easing long-term yields. On the same day as the announcement, the 30-year gilt yield dropped by 12 basis points to 5.24%, tracking movements in U.S. 30-year Treasury yields. This decline follows a recent peak of 5.649% on April 9, the highest since May 1998, triggered by a market reaction to President Trump’s tariff announcement imposing a 104% duty on Chinese imports.

Meanwhile, 5-year gilt yields remained stable at 3.98%, underscoring a divergence in investor sentiment between shorter and longer-term government securities. The inverse movements in yields across maturities highlight shifting risk premiums and inflation expectations, factors that heavily influence the government’s debt management strategy.

Balancing fiscal policy with market constraints

The UK’s strategy reveals an attempt to reconcile the tension between fiscal expansion and borrowing cost containment. While the surge in the fiscal deficit necessitates increased debt issuance, the government is selectively minimizing long-term borrowing to avoid locking in historically high yields over decades. This balancing act also underscores how global economic developments—such as U.S. trade actions and inflation fears—can indirectly impact UK sovereign debt markets.

By leaning on short-term debt instruments and adjusting issuance flexibility, the DMO is aiming to maintain market confidence while preserving optionality for future fiscal maneuvers. However, this approach also introduces rollover risks and future interest rate uncertainties, especially if inflation persists or monetary policy tightens.

The UK’s recalibration of bond issuance is a direct response to a deteriorating fiscal balance and heightened bond market volatility. By shifting toward short- and medium-term borrowing, the government is seeking to optimize its debt profile in a challenging macroeconomic environment. This approach, though prudent in the short term, also reflects broader systemic pressures—from fiscal overshoot to geopolitical trade shocks—that continue to test the resilience and adaptability of UK public finance strategy.

Source: Reuters

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Diana Wallace

Cryptocurrency

ARK Invest has updated its projection for Bitcoin, forecasting a staggering price target of around $2.4 million by the year 2030. This ambitious outlook is grounded in a detailed modeling framework that evaluates Bitcoin’s potential market share, trends in adoption, and supply characteristics, offering insights into the cryptocurrency’s possible trajectory.

What does the 2030 Bitcoin Target Entail?

This projected price implies an impressive annual compound growth rate of roughly 72% from the end of 2024 to the end of 2030. The report also details alternative scenarios, with a base case estimating Bitcoin at $1.2 million (53% CAGR) and a more pessimistic view placing it at $500,000 (32% CAGR).

How Does Institutional Investment Influence Bitcoin’s Value?

A key factor in the optimistic forecast is institutional investment, which ARK Invest identifies as crucial for Bitcoin’s growth. It is projected that approximately 6.5% of the global financial market portfolio, excluding gold, could be allocated to Bitcoin, laying the groundwork for this future valuation.

The report also explores Bitcoin’s potential as “digital gold,” suggesting it could provide a more flexible and transparent value storage option. If Bitcoin manages to capture 60% of gold’s $18 trillion market value, it could significantly boost the optimistic scenario.

● Emerging markets may drive demand as Bitcoin serves as a hedge against inflation.

● A projected 13.5% contribution to the $2.4 million target comes from a 6% market penetration rate.

● New developments in corporate treasuries and financial services could further enhance Bitcoin’s appeal.

● Active supply adjustments, including previously held or lost Bitcoins, could elevate price targets.

ARK Invest highlights that current valuation models fail to consider the scarcity of Bitcoin and its lost supply, suggesting there may be untapped potential in the market. The comprehensive analysis provided aims to shed light on Bitcoin’s evolving role within financial portfolios, offering valuable context for enthusiasts and stakeholders alike.