US tariff pause eases markets, but tensions with China and oil volatility mark the week

Weekly News Summary (April 7-13, 2025) – Cesce Analysis

 

Global economic uncertainty dominated the week, marked by trade tensions, oil price volatility, and significant political movements in various regions, according to Cesce's latest Country Risk analysis.

 

Trade War and Markets: The main focus was on the United States, where President Donald Trump decided to apply a 90-day pause the entry into force of new reciprocal tariffs on more than 50 countries, a measure that was planned for April 9. This decision, taken under pressure from financial markets and fears of recession, generated temporary relief, causing one of the largest daily increases in the S&P 500 in decades, although some of the gains were later reversed. However, a general minimum tariff of 10% applied since April 5.

 

In parallel, the The trade war between the US and China has intensified, reaching a reciprocal tariff of 125%This amounts to a virtual trade blockade between the two powers. Beijing responded with identical tariffs on all US imports and non-tariff measures, in addition to filing a complaint with the WTO, alleging that the US actions "seriously violate WTO rules." China is also seeking to strengthen ties in Asia and with the EU to mitigate the impact.

 

La The European Union reacted cautiously., also pausing its countermeasures for 90 days. European Commission President Ursula von der Leyen stressed that the truce offers "an opportunity for negotiations", although he warned: "All options remain on the table".

 

Oil and the Global Economy: The price of WTI oil was around $ 60 a barrel, down 25% from a year ago. This drop is attributed to both fears of a global slowdown due to Trump's trade policies and the OPEC+ decision to increase production in May (more than 400.000 extra barrels per day), interpreted as a Saudi maneuver against non-complying members. Forecasts point to possible drops to $50/b if the recession worsens, which would make many fracking projects in the US unviable (unprofitable below $65/b).

 

Latin America:

 

• Argentina: Reached a key agreement with the IMF for 20.000 million (Extended Facilities) and partially relaxed the exchange rate controls, replacing controlled devaluation with a system of floating bands (1.000-1.400 pesos). Restrictions were lifted for individuals, but remain in place for businesses.
• Ecuador: Daniel Noboa was reelected president with nearly 56% of the vote, consolidating his mandate until 2029 against Correa's candidate, Luisa González, who alleged fraud without evidence. Noboa faces challenges such as drug violence, the energy crisis, and a weak economy.
• Mexico/USA: New tensions arose over water, with Trump accusing Mexico of violating the 1944 Water Treaty and threatening tariffs. President Claudia Sheinbaum defended Mexico's compliance in the context of the drought and proposed dialogue.

 

Other Regions:

 

• Asia: South Korea called presidential elections for June 3 to overcome the political crisis following the impeachment of Yoon Suk Yeol. In China, in addition to trade retaliation, Beijing is seeking alliances in Southeast Asia (Xi's visit to Vietnam, Malaysia, and Cambodia).
• Eastern Europe: Uzbekistan signed agreements with the US to exploit critical minerals and formalized its accession to the Eurasian Development Bank.
• Africa and the Middle East: Diplomatic crisis between Algeria and Mali over the downing of a Malian drone. The Alliance of Sahel States described the act as "an aggression against all Member States; hostile and detrimental to the fight against terrorism"In the UAE, GDP growth was 3,9% in 2024, but the outlook for 2025 is uncertain due to the global economy and oil prices; negotiations for a free trade agreement with the EU have begun. In the DRC, the first meeting between the government and the M23 rebels took place in Qatar. In Gabon, coup leader Brice Oligui Nguema won the presidential elections. In Guinea, the military junta approved a new constitution and will control the electoral process. Nigeria's rating was upgraded by Fitch to 'B' (stable) thanks to the Tinubuh reforms.
• Germany: A CDU/CSU-SPD coalition government was formed after 45 days of negotiations, led by Friedrich Merz (CDU). The new chancellor stated that his government "It will represent a strong partner in the European Union and will respond firmly to global tensions, including those caused by US trade policies."The agreement includes reforms in migration, taxes, defense, and digitalization.

 

Overall, the week was dominated by the handling of trade tensions initiated by the U.S., with a pause that offered a temporary respite but failed to eliminate the underlying uncertainty, while various regional political and economic hotspots added complexity to the global outlook.