Trump's recent tariff actions have rattled global markets, with the China-US trade conflict intensifying. Investor confidence in US assets is declining as recession fears mount. Key economic data releases this week will be closely watched amid surging inflation expectations and gold reaching new highs.

Key Events and Data to Watch This Week (April 14–18, 2025)

Monday

• 04:00: China Trade Balance (Mar)

Tuesday

• 02:30: Australia RBA Meeting Minutes

• 07:00: UK Claimant Count Change (Mar)

• 07:00: UK Employment Change (Mar)

• 07:00: UK Average Earnings Excluding Bonus (Feb)

• 10:00: Eurozone Industrial Production (Feb)

• 13:30: Canada Consumer Price Index (Mar)

Wednesday

• 03:00: China Gross Domestic Product (Q1)

• 03:00: China Industrial Production (Mar)

• 03:00: China Retail Sales (Mar)

• 07:00: UK Consumer Price Index (Mar)

• 07:00: UK Producer Price Index (Mar)

• 07:00: UK Retail Price Index (Mar)

• 10:00: Eurozone Harmonized Index of Consumer Prices (Mar)

• 13:30: US Retail Sales (Mar)

• 14:15: US Industrial Production (Mar)

• 14:45: Canada BoC Interest Rate Decision

Thursday

• 02:30: Australia Employment Change (Mar)

• 13:15: Eurozone ECB Interest Rate Decision

• 13:30: US Housing Starts (Mar)

• 13:30: US Building Permits (Mar)

Friday

• 00:30: Japan National Consumer Price Index (Mar)

Chaos Escalates as Tariff Volatility Rattles Global Markets

The reciprocal tariffs announced by U.S. President Donald Trump on April 2 sent shockwaves through global markets. Just days later, the decision to delay implementation added to the volatility—and with China now retaliating, the chaos continues.

Last week's U.S. economic data showed signs of easing inflationary pressure prior to the tariffs. However, growing concerns over trade measures have pushed inflation expectations to multi-decade highs and weighed on consumer confidence.

Trump's unpredictable actions on tariffs have only amplified uncertainty. This uncertainty, coupled with declining sentiment, is likely to restrain consumer spending and business investment—fanning fears that the U.S. economy may slip into recession.

Against this backdrop, investors are increasingly questioning the notion of U.S. economic exceptionalism. The dollar has dropped to its lowest level since February 2022, long-term Treasury yields have seen their biggest weekly spike since the 1980s, and the S&P 500 has fallen to its lowest since February 2024.

As investors flee U.S. assets, safe-haven demand has surged: gold hit a fresh record above $3,245 per ounce, the yen climbed to a seven-month high, and the Swiss franc touched a 10-year peak.

No Truce in Sight: Trade War Between Superpowers Escalates

The intensifying trade conflict between the U.S. and China continues to cast a shadow over global markets. While Trump announced a 90-day pause on reciprocal tariffs for over 60 trading partners last week, China was excluded—instead, tariffs on Chinese imports were hiked to 145%.

Beijing responded on Friday by raising its retaliatory tariffs on U.S. goods to 125%, warning that any further violation of Chinese rights and interests would be met with firm countermeasures. However, China's Ministry of Finance stated that it would not issue new tariffs, citing the unmarketability of American products under current duty levels. Instead, officials took steps to reduce the number of U.S. films shown in cinemas and advised citizens to avoid travel to the United States.

Tariffs are now approaching levels that could effectively halt trade between the world's two largest economies. Without a negotiated de-escalation, the record-high tariffs will lead to higher costs for consumers and businesses on both sides—and potentially shave more than 1% off GDP growth in each country.

Trump Exempts Electronics, but Sector-Specific Tariffs Loom

As global markets attempt to assess the damage, Trump announced an exemption for smartphones, computers, and other electronics imported from China. However, he made clear this was not a retreat. Instead, these products will fall under upcoming sector-specific tariffs, including those for semiconductors and electronics.

Details on semiconductor tariffs are expected this week, while new duties on electronics could take weeks or even months—pending a review of the entire supply chain.

According to RAND's China Research Center, electronics account for over $100 billion of the $700 billion U.S.-China trade volume. The exemption temporarily lowers the effective tariff rate by around 28.5%, although Bloomberg estimates the overall average U.S. import tariff remains nearly unchanged—dipping slightly from 26.85% to 26.25%.

U.S. Sentiment Hits Multi-Decade Low as Recession Fears Mount

Despite the recent pause and exemptions, Wall Street economists warn that recession risks remain high. Morgan Stanley, BNP Paribas, and Barclays Plc forecast U.S. GDP growth to range between -0.1% and 0.6% in 2025, alongside expectations for higher inflation and unemployment.

The biggest driver of concern is policy uncertainty stemming from Trump's back-and-forth moves, which have eroded confidence and are likely to weigh on consumption and investment. These effects could become more visible in the coming months.

The University of Michigan's latest survey shows consumer sentiment dropped in April to its second-lowest level since the 1970s, while inflation expectations surged to their highest since 1981.

U.S. consumers now anticipate a 6.7% increase in prices over the next year and 4.4% over the next five to ten years. Concern over job security has also risen sharply —expectations for higher unemployment over the next year have reached their highest level since 2009.

The survey reflects a sharp deterioration in consumer sentiment, and actual confidence may be even lower, as the data was collected between March 25 and April 8—before the latest escalation in U.S.-China tariff tensions.

Dollar Under Pressure as Confidence in U.S. Economy Wanes

Confidence in the U.S. economy and its assets continues to erode. Trump's tariff exemptions are no longer sufficient to strengthen the dollar. A Bloomberg survey found that nearly 80% of economists expect the greenback—already at its lowest level since 2022—to weaken further in the coming months.

As Duhani Capital Research team, we assess that losses in the U.S. dollar could continue in the coming months as the expected impact of tariffs begins to show up in hard economic data. For the dollar to stage a lasting recovery, trade negotiations would need to yield positive outcomes and be calibrated in a way that eases concerns without causing permanent damage to the U.S. economy.

On the other hand, if expectations for rate cuts fail to materialize, some of the dollar's losses could be reversed. While markets are currently pricing in more than three rate cuts by the Federal Reserve this year, policymakers have not endorsed such an outlook. An increasing number of officials are highlighting the inflation risks posed by tariffs and are ruling out a more hasty policy easing aimed at supporting growth and the labor market.

New York Fed President John Williams predicts that tariffs and immigration policy could drag U.S. growth below 1%, pushing unemployment to 4.5-5% and inflation to 3.5-4%. He advocates patience in adjusting interest rates until the economic effects of Trump's policies become clearer.

Other officials, including St. Louis Fed's Alberto Musalem, Boston Fed's Susan Collins, and Minneapolis Fed's Neel Kashkari, have echoed these concerns and stressed the importance of anchoring inflation expectations.

In short, Fed officials are maintaining a cautious stance and are unlikely to act until more clarity emerges. However, markets remain fixated on recession risks, and rate cut bets are likely to stay elevated until investors are convinced the Fed will deliver fewer cuts than expected. This suggests flows into other safe-haven assets may continue.

Gold Shines Brighter Amid Chaos and Recession Fears

Gold soared above $3,245 per ounce in early trading this week, hitting a new all-time high. The yellow metal has gained roughly 23% year-to-date, with over 6% of that coming during last week's chaos alone.

This rally has already blown past many Wall Street year-end forecasts. Goldman Sachs, which had previously projected gold to reach $3,100 by year-end, has now revised its forecast to $3,700.

The bank assigns a 45% probability to a U.S. recession, and in that scenario, gold could accelerate toward $3,880. Economists also expect prices to breach $4,000 by mid-2026.

Ultimately, gold is likely to remain the preferred safe haven for global buyers—including central banks—amid rising risks and uncertainty. For gold to experience a meaningful decline, there would need to be a sustained rebound in global risk appetite; otherwise, any pullbacks are likely to be limited and temporary.