NASDAQ Jumps as Trump Hits China Hard
NASDAQ surge stuns markets, but Trump steep China tariffs spark fears of a $7.35T global economic fallout. Is the rally built to last?
BullPower
Apr 09 2025
The NASDAQ soared by 10%, sparking headlines and excitement across the financial world—but are investors getting ahead of themselves? While the global market rally signals renewed optimism, leading experts are sounding alarms: Trump’s aggressive China tariffs and isolation strategy could backfire, triggering a potential $7.35 trillion hit to the global economy.
Last week, Donald Trump announced a 90-day delay on high tariffs for most countries, giving the markets temporary relief. However, China the world’s second-largest economy was pointedly excluded. In fact, the U.S. president doubled down, raising tariffs on China to an unprecedented 125%, further isolating Beijing and intensifying an already volatile trade relationship.
The World Trade Organization (WTO) has issued sharp warnings, predicting that a worsening U.S.-China trade war could slash goods trade between the two nations by up to 80%, and reduce global real GDP by nearly 7% a staggering loss of approximately $7.35 trillion. With trade between the U.S. and China totaling around $582 billion in 2024, the threat is very real.
Even more troubling is the rising risk of a military confrontation over Taiwan. China views the island as a sovereign part of its territory, while the U.S. has long maintained a (sometimes informal) commitment to defend Taiwan. Analysts warn that China may respond to economic pressure with heightened military activity in the region. This already appears to be happening, with a noticeable uptick in Chinese fighter jet activity in airspace that Taiwan considers its own.
Trump bold strategy to isolate China from the global economy may yield short-term tactical wins, but it severely underestimates the cultural and political importance of “saving face” in Chinese society. The public humiliation felt in Beijing is not likely to be forgotten. Experts emphasize that China holds powerful cards—including massive U.S. debt holdings and the ability to stoke further tensions around Taiwan.
While some investors are celebrating Trump’s delay on tariffs, it’s important to stress that this is only a pause—not a cancellation. The deeper U.S.-China tensions remain dangerously unresolved. Trump’s erratic policy shifts targeting China with harsh tariffs while sparing others risk creating a complex and unstable dynamic that could spark further volatility in global markets.
Despite the growing tension, most analysts believe that the likelihood of direct military conflict remains low. Both the U.S. and China understand the mutually destructive consequences of such a war. Their deep economic ties act as a natural check on escalation.
As Mark Hackett of Nationwide aptly put it: “Extreme market rallies are no healthier than extreme drops they're both driven by emotion. Markets don’t bottom in a V-shape. It takes clarity and patience to sustain a true recovery.”
In conclusion, the euphoric market response to the NASDAQ’s dramatic 10% rally may prove fleeting. Unless the underlying U.S.-China economic rift is resolved with diplomacy and precision, the road ahead could be marked by extreme volatility, deep economic consequences, and if miscalculations occur potential geopolitical disaster.
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Please note that the article should not be considered as investment advice or marketing, and it does not take into account the personal data and requirements of any individual. It is not a substitute for the reader's own judgment, and it should not be considered as advice or recommendation for buying or selling any securities or financial products.
