Dear Focus Reader,

This week, President Donald Trump announced a 90-day pause on new tariffs affecting most countries, reducing them to 10%. However, the administration doubled down on tariffs on China, with an effective rate of 145%, marking a substantial escalation in the trade conflict.

In response, China raised duties on U.S. goods to 125%, saying "the U.S. side's imposition of excessively high tariffs on China seriously violates international economic and trade rules…and is simply an act of unilateral bullying and coercion."

These developments have led to significant market fluctuations. While the announcement of the tariff pause caused a brief reprieve, with the Dow Jones Industrial Average surging by 1,800 points, deep concerns persist about the long-term economic impacts for the U.S., China, and globally of sustained high tariffs between the U.S. and China. Some analysts have warned that we're at a much higher risk for a global recession than just a few weeks ago.

China has also taken measures affecting U.S. media. The National Film Administration announced plans to reduce imports of Hollywood films, which has been seen as a strategic response to U.S. trade actions.

Meanwhile, China is engaging with other nations to build regional alignment amid the trade dispute as well, including Vietnam, Malaysia, and Cambodia, as Vietnam—caught between its two largest trade partners—cracks down on Chinese transshipments in hopes of avoiding newly announced U.S. tariffs. Still, on his upcoming trip, Xi and Vietnamese leaders are expected to sign around 40 agreements focused on infrastructure and security cooperation.

Concurrently, the European Union and China have initiated discussions to potentially replace existing EU tariffs on Chinese electric vehicles with minimum pricing agreements. The current tariffs, imposed last October, reach up to 45.3% for various Chinese EV manufacturers. These talks aim to ease trade tensions and stabilize the EV market between the EU and China.

Learn more China-U.S. relations by catching up on our latest Focus content, including topics on Trump's China policy, the complex realities of exchange, and more.