And just like that, the US-China trade war has begun

And just like that, the U.S.-China trade war has begun. The deadline has passed, and Washington’s 10% tariffs on Chinese imports are now live, just days after being announced. Unlike the eleventh-hour reprieve granted to Mexico and Canada, no last-minute deal materialized for Beijing.

Risk markets are turning a pale shade of red, proving once again that relief rallies in this environment come with a shelf life measured in hours, not days.

Investors who bet on a sustained rebound are getting a harsh reminder—tariff threats may fade temporarily, but they never truly disappear. The latest escalation is snuffing out optimism, fueling a flight to safety, and keeping markets trapped in a cycle of volatility-driven whiplash.

Now, the market’s focus shifts to the next big question—how will China retaliate, and just how ugly can this trade battle get? Beijing has plenty of counterpunch options, from slapping its own tariffs to curbing U.S. business access to Chinese markets or even playing the currency card.

Beijing isn’t just rolling over—China’s response makes it clear they’re willing to fight back. But unlike Trump’s tariff sledgehammer, Xi Jinping’s counterpunch is sharp, calculated, and politically precise.

Rather than matching Washington’s all-encompassing tariff blitz, China is taking dead aim at pressure points—hitting coal, LNG, and agricultural equipment, sectors deeply entrenched in U.S. red state politics. The message? They’re not going for an all-out economic brawl, but they’re making it hurt where it counts.

But here’s where things get explosive—Beijing has launched a probe into Google and slapped two major U.S. clothing brands onto its "unreliable entity" list—essentially painting a target on their backs for future punishment. This is no random move—this is China weaponizing corporate America against its own government.

The real play? Forcing U.S. industry giants to bang on the White House door, demanding Trump back off. Beijing isn’t just fighting Washington—it’s turning America’s most powerful CEOs into its unwitting lobbyists.

So now the question is—who blinks first? The White House, under pressure from Wall Street and Corporate Titans? Or Beijing, if the pain starts hitting home? Either way, this trade war chess match just got a whole lot messier.

With de-escalation likely not on the immediate horizon, markets should prepare for more volatility, more uncertainty, and more fallout. The real fireworks are just getting started. Strap in.

A 10% tariff might not seem like much—especially when Trump floated 60% levies on the campaign trail—but the real impact runs deeper than the headline number.

Yes, policymakers could try to cushion the blow with stimulus, but there’s a key difference this time around—China’s economy isn’t the powerhouse it was during the last U.S.-China trade war. The property sector is in crisis, debt levels are sky-high, and growth momentum is fading. Beijing may have fiscal and monetary tools to counteract the damage, but they’re not infinite, and the market knows it.

The real risk? If this trade war drags on, China may have to make difficult choices—devalue the yuan, ramp up credit, or retaliate with new trade restrictions. No matter the path, markets should brace for spillover effects far beyond a simple tariff hike.

The U.S. tariff hammer hasn’t struck the eurozone yet, but the ongoing uncertainty is enough to send shockwaves through the markets. With no clear answers from Washington, traders are quickly factoring in a new tariff premium, adding it to an already growing list of downside risks constraining eurozone growth. As a result, EUR/USD is trading down at 1.0280 after filling an overnight technical gap.

And let’s be real—finding an upside scenario here is like searching for a needle in a haystack. With the eurozone economy already in a fragile state, the market is starting to reprice the ECB’s endgame, and the landing zone for rates is slipping toward sub-1.75% territory in the near term.

The bottom line? The eurozone is again in a tariff fog, with no clear visibility ahead. If Washington turns its trade war crosshairs toward Europe, the euro could be in for a brutal repricing.