There is no winner in a trade war, because sabotaging trade hurts both sides. “Killing 1,000 enemies while losing 800 of one’s own” — a Chinese saying for a scenario in which the cost does not justify the gain — is applicable in this case.

Despite the growing risk of economic recession at home, President Donald Trump has done nothing to prepare voters for the pain ahead. He is betting that the Federal Reserve will relax interest rates to mitigate the effect of tariffs, but monetary easing could also trigger an inflation spike.

Nearly five years ago, I warned that stagflation was only a broken supply chain away. A temporary outbreak did indeed occur in the immediate aftermath of the COVID-19 shock, as a surge in inflation coincided with an anemic recovery in global demand. But, like the pandemic, that economic disruption quickly subsided. Today, a more worrisome form of stagflation is in the offing, threatening severe and lasting consequences for the global economy and world financial markets.

China has taken a tough stance against US President Donald Trump, matching the last two rounds of US tariffs with tariffs of its own. The US tariff on goods from China is now 145%, while China’s is 125%. Why does China take such a position, and are there any off-ramps that would allow it to mitigate the costs of a prolonged trade war?

There are signs that the Chinese economy has been improving, owing to the government’s September 2024 stimulus package. Year-on-year GDP growth in the first quarter of this year reached 5.4% – continuing the marked acceleration from the third quarter of last year.

For many nations, a highly profitable trade relationship with the United States is now no longer a given. With President Trump’s tariff agenda looming over the world, how is Asia planning for a future where the U.S. may not be so open for business?

The recent tariff episode shook global economic confidence in a way that’s only been seen in the aftermath of major catastrophes, despite relief coming in the short-term. Has the damage been done to America’s trade hegemony?

America needs to come to peace with itself before it can come to peace with the rest of the world. Negotiating an economic detente that contributes to American national healing is, arguably, a question of global interest. But there won’t be any free lunches for the Americans.

An estimate of the impact of the tariff war between China and the U.S. on the Chinese GDP in 2025 is presented. The dependence of the Chinese economy on its exports and, in particular, on its exports to the U.S. has been declining significantly over time. At the current tariff rates, a total cessation of bilateral trade is a real possibility. Under the assumption, the reduction in the rate of growth of Chinese GDP may be estimated to be 1.2%, other things being equal. Even though the announced target rate of Chinese growth is around 5%, the weighted average of the target rates of growth of the provincial-level units is 5.26%, indicating room for further increase. In addition, China is expected to launch additional domestic economic stimulus measures in response to the new tariffs, which should result in an additional growth of 0.5%. For 2025 as a whole, a rate of growth of around 4.5% (5.26 – 1.2 + 0.5) may be predicted.

The effect on history of the last one — the Trump populist revolution — remains to be seen. What is certain, however, is that the Trump phenomenon, its support base and the logic of reform it represents, will not simply vanish.