Trade War 2.0? Trump Threat Triggers Market Selloff IMF Warns of “Uncertainty Era”

President Donald Trump has signaled plans to impose 100% tariffs on Chinese imports, claiming it as a direct response to China’s new export controls on rare earth minerals, a critical resource for global tech and chip industries.

Markets reacted sharply — the S&P 500 dropped 2.7%, Nasdaq plunged 3.6%, and the Dow Jones lost nearly 2%, reflecting growing fears among investors that a new trade war cycle may be unfolding.

The World Trade Organization (WTO) has cut its global trade growth forecast for next year to just 0.5%, down from 1.8%, stating that “U.S. tariff pressure is a key risk to global trade stability.”

Meanwhile, the IMF issued a stark warning: the world economy is entering a phase where “uncertainty is no longer temporary — it is the new normal.” Economic policymakers are increasingly using trade as a geopolitical weapon, raising volatility across global supply chains.

Key Risks to Watch

• Possible retaliation from China and disruption in global supply chains
• Southeast Asia (Thailand, Vietnam, Indonesia) could benefit from China+1 relocation strategies
• Imported inflation risk could rise globally if tariffs push production costs higher
• Global equities may enter a deep correction if tensions escalate further