Chinese Retaliation May Crush Stocks
Posted April 10, 2025
Markets rallied on Wednesday when President Trump announced a delay in imposing crippling tariffs on most U.S. trading partners. But the relief may be short-lived—because the one country not spared was China.
Trump’s imposition of 125% tariffs on Chinese goods could be viewed in Beijing as nothing less than an Act Of War and an existential threat to the Chinese Communist Party. And yet, the markets appear to be sleepwalking through what could become a full-scale geopolitical and financial confrontation.
In this new Macro Watch video, I explain how China may soon deliver a devastating blow to the United States—one that could rattle bond markets, drive stock prices down another 20% to 30% or more, and trigger a severe global recession.
China has many ways to strike back—and many reasons to do so.
In this video, we consider several chilling possibilities:
• A sudden dump of hundreds of billions of dollars of U.S. Treasuries,
• An immediate ban on all Chinese exports to the U.S., causing mass shortages and inflation,
• The closure of all American businesses operating in China, from Tesla to Starbucks,
• A military blockade—or even attack—on Taiwan,
• Cyberattacks, hostage diplomacy, and the unleashing of North Korea on U.S. allies,
• Or the most shocking of all: Chinese troops entering Ukraine to fight alongside Russians and North Koreans, sending a brutal message to Europe.
These may sound extreme. But they are not impossible.
After all, when the United States imposed an oil embargo on Japan in 1941, Japan responded by attacking Pearl Harbor. Japan didn’t have nuclear weapons. China does.
If the United States is attempting to isolate and economically crush China, China may decide to fight back with everything it has.
Don’t be caught off guard.
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