Trump Pushes the Fed as China Retaliates on Tariffs: Global Markets Brace for Impact

US Jobs Data Surprises While Unemployment Rises

On Friday, the US unemployment rate rose to 4.2%, slightly higher than the expected 4.1%. However, non-farm payrolls added 228,000 jobs, significantly surpassing the forecast of 135,000. Despite mounting economic pressures, the labor market remains resilient. This duality has left investors and analysts divided: Is the US economy on solid footing, or are we heading toward turbulence masked by employment figures?

Tariffs Cause Deep, Systemic Effects Beyond Immediate Headlines

Tariffs rarely strike like lightning. Their consequences unfold subtly, yet pervasively. When tariffs rise abruptly, exporters to the US face higher costs. This disrupts supply chains, leads to contract cancellations, layoffs, and shrinking profit margins. Companies are forced to either absorb the cost or attempt price hikes—often unsuccessfully.

Even American giants like Nike and Lululemon, which rely on overseas manufacturing, are feeling the heat. Tariffs ricochet back onto the US workforce, potentially leading to job losses and market instability. President Trump insists these measures are for long-term prosperity, but the short-term disruptions are evident.

El Salvador's President Reassures Bitcoin Holders

In the face of Bitcoin's volatility, El Salvador's President Nayib Bukele stepped in to calm nerves. Bukele, known for making BTC legal tender, publicly addressed concerns over the current crypto bear market. His message? Don't panic.

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"Stop watching the charts and enjoy life," Bukele said. He reassured holders that Bitcoin's price cycles are normal and stressed the importance of long-term thinking. His statement reinforced El Salvador's commitment to BTC as part of its financial strategy.

China's Counterpunch: Tariffs and Rare Earth Restrictions

China, the world's second-largest economy, has struck back. Beijing announced a 34% tariff on all US imports starting April 10 and imposed export controls on seven rare earth metals. The move is widely seen as a calculated jab, knowing the strategic importance of rare earths to US manufacturing.

This tit-for-tat scenario resembles the 2019-2020 US-China trade war, which only ended in a fragile Phase One agreement after damaging both economies. In response to China's retaliation, President Trump doubled down, saying, "China played the wrong move. They're panicking."

UK's Peace Offering and Broader Diplomatic Trends

While China retaliates, the UK is attempting to de-escalate. Prime Minister Keir Starmer is reportedly pursuing a new trade agreement with the US. Britain has reduced tariffs on several American imports and signaled readiness to ease restrictions on US tech firms.

Elsewhere, nations are showing willingness to negotiate. Argentina is in final-stage talks with the US for a zero-tariff arrangement. Cambodia pledged to reduce tariffs on 19 product categories, signaling goodwill. Across Southeast Asia and Latin America, countries are adjusting trade policies to maintain favorable US ties.

JPMorgan's Global Recession Warning

JPMorgan Chase raised red flags in a new report, warning of a 60% chance of global recession. The primary catalyst? Trump's sweeping tariffs—the largest since 1968—which threaten to disrupt supply chains and dampen sentiment. With retaliatory moves expected, recessionary fears are rising. JPMorgan suggests monitoring US household purchasing power and Market Economic Indicators (MEI) to assess incoming risks.

Trump Urges Fed to Cut Rates Amid Market Tumult

President Trump called the current moment "perfect" for the Federal Reserve to reduce interest rates. He cited easing inflation, falling energy prices, and strong job growth as justification. According to Trump, this is a pivotal opportunity for Jerome Powell to act decisively.

In contrast, Powell responded cautiously. He acknowledged the inflationary risks posed by tariffs and emphasized the Fed would wait for clearer signals before making policy changes. As a result, CME futures now price in four rate cuts in 2025, totaling a 1% reduction.

The Three-Pronged Strategy Behind Trump’s Tariff Plan

According to Trump’s Treasury Secretary, tariffs under the Trump administration serve three goals: to correct unfair trade practices, boost federal revenue, and serve as bargaining tools in broader geopolitical negotiations. Trump uses tariffs as a multipurpose instrument—especially against nations with high trade surpluses against the US.

While Trump calls for trade reciprocity and praises "Made in America" as a national security priority, many fear these policies may slow growth, raise inflation, and increase unemployment. Protectionist moves such as threatening 200% tariffs on European alcoholic beverages are rattling US industries reliant on global supply chains.

Game Theory in Global Trade: Reactions Will Vary

Some countries will negotiate to reduce tariffs, seeing long-term partnership benefits. Others may retaliate. This dynamic, viewed through the lens of game theory, predicts a drawn-out tariff marathon rather than a quick sprint. Consequently, global uncertainty is now a persistent theme.

Crypto and Trade Policy Converge

Interestingly, crypto intersects with trade policy. Stablecoin issuers are now major buyers of US Treasuries, giving the US government added incentive to regulate and support digital assets. State legislatures in the US are increasingly proposing pro-Bitcoin reserve policies.

With SEC leadership softening post-Gensler and more bipartisan support for crypto regulation in Congress, the landscape for digital assets in America is shifting. The political utility of crypto is rising as it becomes entangled in broader financial and trade strategy.

Conclusion: A Global Crossroads of Risk and Reinvention

The confluence of inflation concerns, geopolitical brinksmanship, trade policy, and digital currency adoption is creating a complex economic mosaic. Tariffs may offer temporary leverage, but the costs—from slowed growth to investor anxiety—are mounting.

As Trump applies pressure on the Fed and doubles down on tariffs, the world braces for potential economic aftershocks. Countries will need to reassess trade dependencies, diversify markets, and fortify their domestic industries to weather this period of volatility.

While the storm brews, one thing remains certain: The new global order will be shaped not just by policy, but by the pace at which economies adapt.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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