On April 4, 2025, China declared a 34% tariff on all imports from the U.S., to take effect on April 10, as a direct reaction to recent tariff hikes imposed by the United States on Chinese products.

This escalation has heightened trade frictions between the two largest economies, resulting in considerable volatility in global financial markets.

In the U.S., major stock indices faced significant losses.

The S&P 500 dropped by 4.8%, marking its most significant single-day decline since June 2020. The Dow Jones Industrial Average fell by 4%, while the Nasdaq Composite decreased by 6%, entering bear market territory.

The CBOE Volatility Index (VIX), often called Wall Street's 'fear gauge,' spiked, signaling rising market uncertainty.

The energy sector also endured notable downturns.

West Texas Intermediate (WTI) crude oil prices fell by 7.4%, closing at $62 per barrel.

In the bond market, the yield on the U.S. 10-year Treasury note dropped to 3.99%, indicating heightened demand for safe-haven assets amidst growing trade tensions.

China's retaliatory actions included not just new tariffs but also the introduction of export controls on key rare earth elements such as samarium and gadolinium, vital for various high-tech and defense applications.

Additionally, China halted imports of certain U.S. agricultural items and placed multiple U.S. companies on its trade sanctions and export control lists.

These developments have raised alarms among economists and policymakers regarding the potential for a global economic slowdown.

The International Monetary Fund has cautioned that the worsening trade conflict could spur higher inflation and slow economic growth globally.

As the situation unfolds, market players and analysts are carefully observing further policy updates and economic indicators to evaluate the broader ramifications of the ongoing trade dispute.