The Global Financial Quandary Amid the Tariff Storm

In April 2025, the United States announced the implementation of the “reciprocal tariff” policy. Like a boulder dropped into the calm waters of the global financial realm, it set off huge waves. The global financial markets plunged into severe turmoil. Asset prices across various sectors fluctuated wildly, investors’ panic spread rapidly, and the uncertainty surrounding the economic outlook increased significantly. This tariff storm has emerged as a crucial factor shaping the global financial landscape, warranting in - depth analysis.

The US stock futures market reacted extremely swiftly to the US tariff policy. On April 6, the S&P 500 stock index futures opened 2.6% lower. Subsequently, the decline rapidly widened to over 4%, and the Nasdaq futures plunged by more than 5%. The VIX futures, an index of market fear, soared 34.4%, hitting a multi - year high. This data vividly reflects the sharp escalation of market risk - aversion sentiment and investors’ pessimistic expectations for the global economic outlook.

The commodity market was also severely hit. The WTI crude oil futures once dropped below the $60 - per - barrel mark during trading, marking the first time since April 2021. New York copper futures tumbled by more than 8%, and spot silver prices dropped by over 2%. As trading opened in the early Asian session on Monday, the downward trend continued. WTI crude oil futures fell below $60 per barrel on Monday, with an intraday decline of 4%. Spot silver prices dropped 3% at the start of trading on Monday, and the commodity had plummeted 13% last week. New York Comex copper futures dropped 8.5% at one point to $4.03 per pound.

The cryptocurrency market was no exception. Bitcoin and Ethereum declined by 5% and 10% respectively, and other cryptocurrencies also suffered significant losses. Meanwhile, non - US currencies generally weakened. The Australian dollar depreciated by 1% against the US dollar, while the Japanese yen appreciated by more than 1% due to safe - haven demand.

Amid the widespread slump in the global financial markets, the bond market seemed to serve as a “safe haven” for investors. In the early trading on April 7, the bond market rallied significantly. Spot inter - bank bond prices strengthened across the board, with the yields of 5 - to 10 - year government bonds and China Development Bank bonds falling by 8 - 9 basis points. The 30 - year government bond ETFs once again led the market. The 30 - year government bond ETF under Pengyang Fund saw a gain of over 1.39%, with trading volume reaching 8.338 billion yuan and a turnover rate of 46.97%. The 30 - year government bond index ETF under Bosera Fund also rose 1.32%, with trading volume expanding to 2.066 billion yuan and a turnover rate of over 30%.

The uncertainty of the US tariff policy has exacerbated the existing liquidity risks in the foreign exchange market. On the surface, the daily trading volume of the global foreign exchange market reaches as high as $7.5 trillion. However, institutions such as Citigroup and Deutsche Bank are concerned that the proliferation of trading platforms and the extensive use of automated technologies are creating an illusion of market depth.

Data shows that the proportion of successfully executed spot foreign exchange transactions on the Euronext FX platform in January dropped from 82.4% in the same period last year to 74.5%. Since 2021, the bid - ask spreads of the euro - dollar pair, the world’s most actively traded currency pair, have been steadily widening between the periods of strongest and weakest liquidity in a day. Once the market encounters extreme events, liquidity could dry up rapidly, triggering a broader market crisis. The sharp plunge of the US dollar against the Japanese yen on August 5 last year serves as a typical example.

The US “reciprocal tariff” policy has drawn strong reactions from the international community. Italian Prime Minister Giorgia Meloni and top Italian business lobbying groups have warned that the upcoming US tariffs will have a significant impact on Italy’s exports and its already weak economy. Bank of Japan Governor Kazuo Ueda also warned during a speech in the Diet that the extensive tariffs planned by the United States could seriously disrupt the global trade order and have varying degrees of impact on the economies of various countries.

Judging from economic data, according to the average forecasts of 14 economists on GDP and inflation, the economic growth of the United States in the first quarter is only 0.3%. The US inflation swap market is sending out dangerous signals. The one - year inflation swap rate has soared to a two - year high of 3.07%, indicating that investors are betting that Trump’s new tariffs will trigger a roller - coaster ride of “first inflationary, then deflationary” trends.

The global financial market turmoil triggered by the US tariff policy poses severe challenges to investors, enterprises, and governments around the world. Investors need to stay cautious, closely monitor market dynamics, and adjust their investment portfolios rationally. Enterprises should actively respond to the pressure of rising costs and changing market demands and seek new development opportunities. Governments of various countries need to strengthen policy coordination to jointly address the negative impacts of trade protectionism and maintain the stability of the global financial markets. How this tariff storm will ultimately play out and where the global financial markets are headed deserve continued attention.