[Source/Observer Network, Xiong Chaoyi] The rapid escalation of global tariff and trade disputes has led to a crisis spreading to financial markets, while also intensifying the tensions between China and the United States.

According to a report by the South China Morning Post on April 17, Mark Dowding, a senior figure in the investment world, told the newspaper in an interview that he had no doubt that we are moving toward a world revolving around two trade poles (China and the US), rather than the more integrated globalization system we have been accustomed to in the past.

Dowding believes that such a world will be more unstable and "may present greater challenges for countries trying to straddle both sides." He predicts that even if the two countries return to the negotiating table, due to the prevalence of hawks in the US Congress, the tensions may still remain at high levels.

As the Chief Investment Officer of RBC BlueBay Asset Management, one of the top global asset management institutions under the Royal Bank of Canada, Dowding warned that President Trump's aggressive tariff policies could damage "all American assets" and accelerate the long-term de-dollarization process. He also直言ly stated that the way the Trump administration handles tariffs is so clumsy that it undermines America's policy credibility.

Despite the US bullying its trading partners and disrupting global trade, Dowding said that it is not realistic to truly isolate the US in the international community. However, amidst the protectionist surge under Trump, he suggested that China could convert the current "threat" into an "opportunity" by adopting a more open strategy. "With the US becoming increasingly closed off, if China becomes more open, I can only think of this as a constructive thing."

Mark Dowding, RBC BlueBay Asset Management website profile picture

"In the end, it will harm all American assets and the dollar and put the US in a bad situation," Dowding said, indicating that this trade war might mark a "longer-term turning point" in the status of the US dollar as the global reserve currency.

Dowding pointed out that after a long period of "exceptional US growth," the US has lost some advantages compared to other economies, reducing the "appeal" of holding dollars. Dowding predicts that China may reduce its purchases and holdings of this global safe-haven asset in the future, and he does not believe that the talk of an impending "financial war" between China and the US will occur.

The South China Morning Post noted that the week before Dowding made these comments, affected by Trump's series of tariff policies, panic selling occurred in the US financial market, pushing up US Treasury yields and resulting in massive selling of US bonds.

On April 11, the yield on the 10-year US Treasury note surged to 4.592%, the highest level since February of this year. Meanwhile, the yield on the 30-year US Treasury note reached 5.02% on April 9, the highest level since November 2023. As a result, market speculation that the trade war was about to spread to financial markets and that China might sell US Treasury bonds arose.

According to data from the US Treasury Department, in January this year, Japan held $1.079 trillion worth of US Treasury bonds, making it the largest holder of US debt outside the US; followed by China, which held $760.8 billion worth of US Treasury bonds.

Reuters also pointed out that last week, large-scale selling of US Treasury bonds caused long-term yields to rise by the largest margin since the outbreak of the COVID-19 pandemic in 2020, further exacerbating losses for the US, which should have played the role of a haven for financial turmoil. Some investors speculated that, given the impact of Trump's trade policies, global foreign exchange reserve managers like China might be reassessing their holdings of US Treasury bonds.

In response to the unreasonable initiation or escalation of the tariff trade war by the US, China once again took a strong countermeasure on April 11, announcing that tariffs on US goods would be increased to 125%. The relevant announcement pointed out that, given the current tariff levels, there is no market acceptance possibility for US goods imported into China. If the US continues to impose additional tariffs on Chinese goods, China will take no notice.

On the same day, the spokesperson for the Ministry of Commerce of China answered questions from reporters regarding China's countermeasures against the US's renewed increase in tariffs on Chinese products. The spokesperson pointed out that on April 10 Eastern Time, the US announced an executive order to further increase "reciprocal tariffs" on Chinese products. We noticed that the tax rate imposed on Chinese products by the US executive order was 41%, which is 20 percentage points higher than what the US previously claimed. China firmly opposes and strongly condemns the US's arbitrary unilateral tariff measures and has taken resolute countermeasures to safeguard its own rights and interests.

The US's successive imposition of excessively high tariffs on China has already become a numbers game with no practical economic significance, only exposing more clearly the US's use of tariff tools as weapons to bully and coerce, and has become a laughingstock. If the US continues with its tariff number games, China will take no notice. However, if the US persists in substantively harming China's rights and interests, China will resolutely retaliate and see it through to the end.

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Original source: https://www.toutiao.com/article/7494200566629827122/

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