Washington: US President Donald Trump’s global tariffs and warnings of escalating trade wars with China joined the trade war on Wednesday as Fed Chairman Jerome Powell predicts inflation and stock markets suffer from new turbulence.
Powell said tariffs are “very likely” to cause temporary price increases and could prompt “more lasting” hikes.
He also pointed out that during the “high uncertainty period”, there is “volatility” in the market.
The Nasdaqs saw this damage on Wall Street, where the Nasdaqs fell more than 4%, the Standard & Poor’s more than 3%, and Dow Jones over two.
The charges for leadership decline were NVIDIA, which fell more than 10% as part of a quarrel over Trump against China, and due to new export restrictions on U.S. to semiconductors.
Ajay Banga, head of the World Bank, responded to Powell and told reporters: “Uncertainty and volatility are undoubtedly a contribution to a more cautious economic and business environment.”
Trump remains optimistic.
He is in the business that his strategy, which aims to lead to multiple individual trade agreements, will lower barriers to U.S. products and move manufacturing to the U.S.
He said he will impose tariffs and another long-term complaint with a delegation of Japan on Wednesday – the cost of U.S. military deployment to defend vital Pacific allies.
But the negotiations parallel the confrontation with China, the top U.S. economic rival.
Although tariffs have been approved at 10%, China faces taxes on many products up to 145%. Beijing accounts for 125% of its responsibility for U.S. goods.
“If the United States really wants to resolve the issue through dialogue and negotiation, it should stop exerting great pressure, stop threats and blackmail blockades, and talk to China on the basis of equality, respect and mutual benefit,” said Lin Ji’an, a spokesman for the Chinese Foreign Ministry.
Lin added: “There is no winner in a tariff war or a trade war, and China does not want to fight, but is not afraid of fighting.”
China said on Wednesday that its first-quarter forecast grew by 5.4% as exporters rush to bring goods out of goods before U.S. taxes.
But Heron Lim of Moody’s analysis told AFP that the impact will be felt in the second quarter as tariffs begin to “hinder China’s exports and will brake on slam investment.”
Ngozi Okonjo-iweala, head of the World Trade Organization, said the uncertainty brought by tariffs “threats to brake global growth and have a serious negative impact on the world, which is the most vulnerable economy.”
– Japanese test case? –
Before the Japan negotiations, Trump posted on his Truth Social Platform that he hoped “something that can be solved (it’s great for both Japan and the United States!”!”
Japan’s special envoy said he was optimistic about the “win-win” outcome for the two countries.
South Korea, a major semiconductor and auto exporter in South Korea, said Treasury Secretary Choi Sang-Mok will meet with U.S. Treasury Secretary Scott Bessent next week.
“The current priority is to use negotiations … delay the imposition of reciprocity tariffs as much as possible and minimize uncertainty about the South Korean companies operating not only in the United States but in global markets,” Choi said.
But SPI Asset Management’s Stephen Innes called the discussion with Japan “canary in tariff coal mines.”
“If Japan reaches a deal – even half the deal – sets the template. If they go out empty-handed, prepare yourself. Other countries will start pricing with confrontation rather than cooperation.”
The Daiwa Institute warned on Wednesday that Trump’s reciprocity tariffs could lead to a 1.8% drop in Japan’s real GDP by 2029.
Despite its popularity among Republicans, Trump’s tariff war is politically risky at home.
California Democratic Governor Gavin Newsom announced he was targeting Trump’s “power to issue tariffs unilaterally, these challenges have caused economic chaos, boosted prices, and harmed the state, households and businesses.”
