1. Trump’s tariffs trigger global economic turmoil
President Donald Trump’s sweeping tariff policy—dubbed “Donald-25”—has imposed a universal 10% tariff on most imports, with additional country-specific levies reaching up to 54% on Chinese goods. This aggressive move has disrupted global supply chains, sparked inflation, and led to a significant downturn in global markets. The U.S. economy is experiencing a sharp decline in international travel, export services, foreign investment, and market confidence, reminiscent of the economic impacts seen during the COVID-19 crisis.
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2. European Central Bank cuts rates amid trade tensions
In response to escalating trade tensions and sluggish economic growth, the European Central Bank (ECB) has reduced its benchmark interest rate by 0.25 percentage points to 2.25%, marking the seventh rate cut in recent times. ECB President Christine Lagarde cited the recent U.S. tariffs as a significant threat to the eurozone economy, introducing substantial uncertainty. The ECB aims to stimulate spending and investment by reducing borrowing costs, but the outcome heavily depends on the resolution of the ongoing U.S.-EU trade conflict.
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3. UK seeks tariff relief in upcoming U.S. trade talks
UK Chancellor Rachel Reeves is set to travel to Washington next week for her first meeting with U.S. Treasury Secretary Scott Bessent, aiming to bolster UK-U.S. trade negotiations. The UK seeks exemptions from the recently imposed U.S. tariffs, particularly targeting reductions on steel, aluminium, and cars. In exchange, the UK has offered to lower its digital services tax that affects U.S. tech firms. While the current proposals are narrow, officials indicate that a broader deal could follow, especially with President Trump’s upcoming state visit to the UK in September.
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4. Markets react to U.S.-China trade war escalation
Global financial markets are grappling with the ongoing repercussions of the U.S.-China trade war, which has led to tariffs exceeding 100% on certain goods. Analysts anticipate that China may reduce loan prime rates to support economic stability. In the U.S., upcoming corporate earnings reports from major firms like Tesla and Alphabet will provide insights into how companies are contending with trade disruptions and inflationary pressures linked to tariffs. Investor confidence remains fragile, with substantial withdrawals from U.S. stock holdings and concerns over prolonged economic turbulence.
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5. IMF to release Global Financial Stability Report
The International Monetary Fund (IMF) is set to release its April 2025 Global Financial Stability Report on Tuesday, April 22, at 10:15 AM ET. The report will assess the global financial system and markets, addressing emerging market financing in a global context. It will focus on current market conditions, highlighting systemic issues that could pose a risk to financial stability and sustained market access by emerging market borrowers. The report will also include analytical chapters on structural or systemic issues relevant to international financial stability.
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