The trade war — as you might have heard — just escalated with the Trump administration’s 104% tariff on Chinese goods going into effect at 12:01 this morning.

According to our macro expert Jim Rickards, when it comes to China: “You're going to get punitive tariffs, not reciprocal tariffs, but punitive tariffs.

“Not only is the U.S. not going to look out for China’s security, we’re probably going to confront them in various ways.” (More on that in a moment.)

But, it’s worth noting, what’s happening in the first 100 days of Trump’s second administration is simply a continuation of Trump’s first term. To wit, here’s the cover of The Wall Street Journal (April 13, 2018)...

It’s also worth mentioning that Biden did not undo Trump’s trade tariffs; in fact, Team Biden expanded tariffs, for example, on Chinese EVs and semiconductors.

My point today? Trade wars can drag on for decades…

Your Rundown for Wednesday, April 9, 2025...

When Trade Wars Turn into Financial Warfare

“If a country raises tariffs on another country,” Jim explains, “you might say that the trade war continues as long as the higher tariffs are in place.

“But trade wars easily morph into currency wars,” he notes. “If a country is the target of tariffs, they can retaliate [by] cheapening their currency.

“The cheaper local currency offsets the costs of higher tariffs and keeps the prices of exported goods unchanged in terms of the importing nation’s currency.

“Other ways of fighting trade wars include non-tariff barriers such as local subsidies, tax breaks and prohibitions,” Jim says.

“For example, Australia has no tariffs on U.S. imports, but it has an outright ban on imports of U.S. beef. That’s a non-tariff barrier that’s worse than a tariff.

“Trade wars can also morph into financial sanctions,” he says, “which are a form of financial warfare — or even morph into a shooting war, such as the Royal Navy blockade of goods for Europe during the Napoleonic Wars.

“One of the longest trade wars was during the Great Depression and beyond… That trade war wasn’t really over until the early 1950s with the General Agreement on Tariffs and Trade (GATT).

“You could count that as a 25-year trade war (1925–1950) fought with currencies, tariffs, embargos and bullets,” Jim says.

“Trade wars involve many factors other than tariffs,” he summarizes, “and can last a long time.”

As for the “rattled” U.S. stock market? Jim warns: “Millions of investors are making fear-driven moves right now that could devastate their family’s wealth in the long run.

“I have warned readers for months that markets were in a bubble,” he adds. “The fact that stocks were overvalued was easy to see.

“The difficult part was knowing when the bubble would pop… Trump’s retaliatory tariff announcement was the pin.

“But there are advantages to market downturns.

“I recommend having cash set aside for times like these,” says Jim. “Investors with cash are able to bargain hunt for stocks at favorable entry prices when the dust settles.”

Stay tuned for creative ways to capitalize on market volatility in the days and weeks ahead.

But before signing off today, we encourage you to explore our trading pro Enrique Abeyta’s insightful China thesis.

This analysis promises to deepen your understanding of the U.S.-China trade war, while offering valuable perspectives on Trump’s overarching strategy and endgame.

Market Rundown for Wednesday, April 9, 2025

S&P 500 futures are down 1.55% to 4,980.

Oil’s sliding bigly: down over 5%, just under $60 for a barrel of WTI.

Gold is up 3% to $3,081 per ounce.

And, at the time of writing, Bitcoin is down 0.45% to $76,265.