Safe Havens Rebound as Trump Escalates Trade War with China
Tokyo, Japan – April 10, 2025 – Global financial markets saw a swift return to safe-haven assets on Thursday as traders reacted to U.S. President Donald Trump’s latest escalation in his trade war with China, despite a surprising 90-day tariff pause extended to over 75 other nations. The yen and Swiss franc surged, gold rallied toward record highs, and U.S. Treasury bonds gained traction, reflecting investor unease as Trump doubled down on Beijing with a 125% tariff hike on Chinese imports, effective immediately.
The move came hours after China retaliated with an 84% duty on U.S. goods, intensifying a tit-for-tat spiral that has rattled markets worldwide. Trump’s Wednesday announcement of the tariff pause for most countries had briefly sparked a historic stock rally—U.S. stocks soared 9.5% on the S&P 500, with Asian markets like Japan’s Nikkei jumping nearly 9%—but the renewed focus on China tempered the optimism. “The U.S.-China confrontation is set to escalate from here,” warned Kevin Buckland of Reuters, capturing the sentiment driving investors back to safety.
Gold leapt 1.3% to $3,122 per ounce, nearing its all-time peak of $3,167.57 set last week, as analysts like Li Zhao of China International Capital Corp (CICC) doubled down on bullish forecasts. “Gold shines as long as Trump is president,” Zhao said, citing its resilience amid potential U.S. economic scenarios—recession, hyperinflation, or spiraling debt. The yen climbed 0.7% to 146.68 against the dollar by early Thursday, while the Swiss franc gained 0.62% to 0.8522, both bolstered by their status as low-risk currencies.
U.S. Treasury bonds also rebounded in Asian trading hours, pushing yields down from recent highs and pressuring the dollar, which slid broadly. The shift follows days of volatility triggered by Trump’s erratic tariff policy, which included a 10% baseline duty on all U.S. imports and targeted levies on autos, steel, and aluminum left untouched by the pause. Analysts point to a “crisis of confidence” in the dollar, with European Central Bank policymaker Francois Villeroy de Galhau noting that Trump’s flip-flops have “eroded trust” in the greenback as a global safe haven.
China’s response has been fierce, with Beijing vowing to “fight to the end” and filing a fresh complaint with the World Trade Organization. The offshore yuan eased 0.2% to 7.3545 per dollar after hitting a record low of 7.4288 earlier this week, signaling further depreciation pressure as Beijing braces for a war of attrition. Risk-sensitive currencies like the Australian dollar, a proxy for China’s economic health, slipped 0.33% to $0.6132 after a wild 3.3% surge Wednesday, mirroring the broader market whiplash.
While Trump’s team insists the tariffs will force trading partners to the table—Commerce Secretary Howard Lutnick boasted that over 70 countries are already seeking deals—the focus on China has overshadowed the relief rally. Posts on X reflect the uncertainty: one user hailed Trump’s strategy as a blow to China’s reliance on U.S. markets, while another warned of a looming dollar decline as “erratic policies breach trust.” For now, safe havens are back in vogue, a stark signal that Trump’s trade war gambit is far from stabilizing the global economic order.
