As the trade war between the U.S. and China intensifies, China has escalated tensions by imposing a staggering 125% tariff on all American goods. In response to this latest round of tariffs announced on Friday, Chinese official Victor Zhikai Gao, vice president of the Center for China and Globalization, declared defiantly: “We don’t care! China has been here for 5,000 years. Most of the time, there was no U.S., and we survived.”
When asked about the potential loss of the U.S. market, which accounts for 15% of China’s trade, Gao maintained, “If the United States wants to bully China, we will manage without them. We expect to survive for another 5,000 years.”
This bold statement came just after President Trump raised tariffs on Chinese imports to an unprecedented 145%, marking a further escalation in the already strained trade relations between the two global powers. The move has sent shockwaves through international financial markets, with stock indices suffering substantial losses since the onset of this latest tariff war in early April.
Geopolitical Tensions and Global Repercussions
Many economists are warning that Trump’s tariffs could trigger a global recession, as nations scramble to recalibrate their trade relationships. The situation is further complicated by Beijing’s approach to Taiwan. Zhiqun Zhu, an international relations professor at Bucknell University, noted, “If China can weather the storm of these tariffs, it will strengthen their resolve in future conflicts, especially with regard to Taiwan.”
While the U.S. does not formally recognize Taiwan’s independence, it has consistently opposed efforts to change the current status quo and continues to provide military support to Taiwan’s defense.
In response to the ongoing tariff conflict, European Union leaders are planning to meet with Chinese President Xi Jinping in late July. Spain’s Prime Minister Pedro Sanchez has publicly called for a closer partnership between the EU and China, in light of Trump’s increasingly aggressive tariff policies.
The Rise of Bitcoin Amidst Market Volatility
As global markets react to the escalating trade tensions, Bitcoin is gaining traction as a hedge against the growing volatility. CryptoSlate reports that Bitcoin has shown remarkable resilience, holding steady in the face of declining stock markets. This decoupling of Bitcoin from traditional financial assets is leading many to view the cryptocurrency as a ‘risk-on’ asset during times of geopolitical instability.
One possible scenario is a devaluation of the Chinese yuan. Arthur Hayes, founder of BitMEX, predicts that if the People’s Bank of China (PBOC) devalues the yuan in response to the tariffs, Chinese capital could flow into Bitcoin, as it has in past years. Hayes remarked, “A yuan devaluation could trigger a capital flight into Bitcoin, similar to what happened in 2013 and 2015.”
In the U.S., the Federal Reserve is prepared to intervene if necessary to stabilize the markets. A senior Fed official stated late Friday that the central bank stands ready to provide support, a statement that was met with enthusiastic optimism in crypto circles. Hayes responded, “And that’s a wrap folks. Buy everything!”
With the global financial landscape in flux, the ongoing trade war and its impact on digital assets like Bitcoin is becoming an increasingly important issue for investors to monitor.
