Also Read: China imposes 125% tariff on US goods, Xi Jinping says ‘not afraid’
These extreme tax hikes on imports can seriously disrupt global supply chains, making it more expensive and difficult for businesses around the world to source parts and sell products.
In 2024 alone, total trade between the US and China stood at roughly $582.4 billion. The US imported about $438.9 billion worth of goods—such as electronics, machinery, and apparel—from China, and exported around $143.5 billion worth of goods, including aircraft, vehicles, and agricultural products.
If these flows slow down or stop altogether. That’s not just a bilateral problem—it’s a global one.
Jahangir Aziz, Head of Emerging Market Economics Research at JP Morgan, puts it simply:
“If global trade is under attack and actually stumbles in the next few months, then emerging markets’ growth won’t be spared.” He added that the impact won’t be limited to just the two countries. “For instance, most of the trade that India does outside of the US and China is also related to the supply chain that goes to the US and China.” If trade between the world’s two largest economies stalls, “no one gets spared.”
Despite Trump’s 90-day pause on reciprocal tariffs for all countries except China, Aziz maintains his view that the US is likely to enter a recession in the second half of the year—and sees a 60% probability of a global recession as the baseline scenario.
Goldman Sachs rolled back its earlier projection of a 65% chance of a US recession within the next 12 months following the tariff pause. But the bank now expects just 0.5% economic growth in 2025 and maintains a 45% probability of a recession over the year ahead.
Larry Fink, Chairman and CEO of BlackRock, recently told the Economic Club of New York that the US may already be in a recession. Citing feedback from business leaders, he said signs of an economic slowdown are becoming increasingly evident on the ground.
Can other countries expect to benefit from China’s trade setbacks? Economist Jeffrey Sachs, speaking to CNBC-TV18, warned that that may not happen.
Also Read: Economist warns India against turning anti China to win US favour
“Trump’s idea is not that India or another country becomes a massive supplier to the United States. If that were to happen, the US would turn on India exactly the same way,” he said.
The financial fallout of the tariffs is already being felt.
Markets are jittery. US stock indices have dropped sharply, and investors aren’t flocking to government bonds as they usually do during uncertainty.
“Bonds aren’t acting as risk-free or as a safe haven,” Aziz said. That lack of confidence could make borrowing more expensive globally, slowing economic activity.
Even the dollar, which often strengthens in times of crisis, has weakened. When currencies and bond markets behave unpredictably, it adds more stress to global financial systems.
Economists also warn that these tariffs are different from earlier trade spats—nearly every major economy is now affected, leaving businesses with fewer options to cushion the blow.
Also Read: Tariffs may drag US growth to near zero, predicts Citi
With production costs rising, companies may pass those costs on to consumers or slow hiring and investment. The longer this continues, the more likely it is to erode global growth, push up inflation, and damage long-term trade relationships.
As Aziz summed it up: “You can’t have a global trade system where the two largest players are putting triple-digit tariffs on each other. That’s just not tenable.”
For the full interview, watch the accompanying video
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