CELENTE: Will We Move From a Trade War to War With China?
Another day, another day of guessing
As we had forecast, two of our Top Trends for 2025 are The Wild Card and The Trump Card, and day-after-day, those cards are being dealt. And who plays them and where they go, nobody knows.
After steep losses in the equity markets—which wiped out nearly $7 trillion in stock values last week—there was a slight bounce back yesterday and today in the U.S. and sharper upward spikes in the EU and Asian markets.
But again, another day another day of guessing. While the U.S. equities were on a high earlier in the day—the Dow was up some 1,400 points—following the announcement by the White House that they would impose a 104 percent tariff on Chinese products, and it will take effect at midnight, the Dow, S&P 500 and Nasdaq slipped into negative territory.
In response to the latest round in the Tariff War, today U.S. Treasury Secretary Scott Bessent said during an interview on CNBC’s “Squawk Box” that “I think it was a big mistake, this Chinese escalation, because they’re playing with a pair of twos. What do we lose by the Chinese raising tariffs on us? We export one-fifth to them of what they export to us, so that is a losing hand for them.”
This was in response to China’s vow yesterday that they will not bow to Trump’s tariffs and will “fight to the end.” And, in the beginning of “the end” they imposed a 34 percent tariff on U.S. products. This is a big deal for China, because if they are not doing business with the U.S., it will prove very costly. Last year about a third of the U.S. trade deficit, some $300 billion, was from buying “Made-in-China” products.
Today, China’s Foreign Ministry spokesperson Lin Jian said that “We will not let anyone take away the Chinese people’s legitimate right to development. We will not tolerate any attempt to harm China’s sovereignty, security and development interests. We will continue to take resolute and strong measures to safeguard our legitimate rights and interests.”
So the question becomes, as we see it, will we move from Trade War to War with China?
As Gerald Celente notes, “When all else fails, they take you to war.”
As reported by South China Morning Post yesterday:
Beijing’s military drills around Taiwan are ‘destabilizing’, G7 says
In a joint statement on Sunday, G7 diplomats said exercises ‘put at risk global security and prosperity’, urged peaceful resolution of issues.
Foreign ministers from the G7 (Group of Seven major advanced economies) called mainland China’s recent military drills around Taiwan provocative and destabilizing while urging dialogue for “peaceful resolution of issues”.
“These increasingly frequent and destabilizing activities are raising cross-Strait tensions and put at risk global security and prosperity,” the top diplomats said in a joint statement on Sunday.
“G7 members continue to encourage the peaceful resolution of issues through constructive cross-Strait dialogue.”
Last week, mainland China’s military concluded two-day war games around Taiwan in which it held long-range, live-fire drills in the East China Sea, marking an escalation of exercises around the island.
The combat drills are fueling fears that one day a military exercise could escalate into a real attack by the People’s Liberation Army.
Beijing views Taiwan as part of China and has not ruled out the use of force to reunify it with the mainland.
During his trip to Japan at the end of March, U.S. Defense Secretary Peter Hegseth said that “America is committed to sustaining robust, ready and credible deterrence in the Indo-Pacific, including across the Taiwan Strait.”
No Recession – Recession
There is growing worldwide fear that the Tariff War will bring on a recession throughout the world and bring down their equity markets.
Yesterday, Peter Navarro, the White House senior trade advisor, appearing on Fox, said the market is “finding a bottom now, but it … look, here’s the thing … it’s going to shift over, and it’s going to be companies in the S&P 500 who are the first to produce here. Those are the ones that are going to lead the recovery.”
And as for not only the equity markets swinging higher, he also forecasts there will be no recession. He said, “And it’s going to happen, Dow 50,000, I guarantee that, and I guarantee no recession, OK? Why? Because when we pass the biggest, broadest tax cut in history within a matter of months, that’s going to be a great stimulus.” Navarro also predicted that because of the big drop in oil prices and lower treasury yields and mortgage rates, “There’s not going to be any inflation.”
As for his mortgage rate decline, so far he got it wrong. As we go to press the average mortgage rate of 6.85 percent hit its highest level in over a month as, according to Mortgage News Daily, the rate on the 30-year fixed mortgage went up 22 basis points yesterday and up 3 basis points today.
So here we are. Another wild day of equity markets wildness and geopolitical tensions. The so-called “relief rally” in the U.S. equity markets showed no sign of relief as the Dow fell more than 300 points, the S&P 500 closed down 1.57 percent and the Nasdaq slumped 2.15 percent.