Yes — the risk is very high. The US-China trade war is heating up again in 2025. This is not the first time happening. This happend before in 2018-19.Both countries are putting heavy tariffs (import taxes) on each other’s goods. Due to this there is increasing global prices, slowing trade, and making companies nervous about sales and profitability. Experts warn that if this continues, a global recession is very likely — and India will not be fully safe from its impact.
The Fear of a Global Recession
Recently, we have witnessed world stock markets have become very volatile. In just four days, global companies lost over $5.8 trillion in value. The main reason? The return of the US-China trade war. On 9th April 2025, the US added heavy tariffs on Chinese goods. In reply, China also put tariffs on American products.
This back-and-forth is not just affecting the US and China. Because both are economic superpowers, their fight affects the entire world. So, a big question is being asked:
Can this trade war push the global economy into a recession?
What Is Happening in the US-China Trade War?
This trade war didn’t start in 2025. It began in 2018 during Donald Trump’s first term as US President. At that time, the US accused China of unfair trade practices, stealing American technology, and not opening its markets to foreign companies. The US then imposed tariffs on Chinese goods, and China responded similarly.
Now in 2025, the trade war has returned — but stronger.
What’s new in April 2025?
- Donald Trump has again become US President and declared a national emergency.
- The US imposed a 104% tariff on Chinese imports from 9th April.
- China replied with 34% tariffs on American goods.
- Trump has also added a general 10% tariff on all imports from any country.
This means importing goods has become much costlier, not only between the US and China but also globally.
How Can This Trade War Lead to a Recession?
A recession means when a country’s economy slows down — less spending, fewer jobs, and low income growth. Let’s understand how a trade war can lead to that.
1. Tariffs Increase Prices
When import taxes rise, the cost of goods also increases. Companies pay more to buy raw materials or finished products. To cover this, they increase prices — this causes inflation. Consumers then cut spending, which slows the economy.
2. Global Supply Chains Break
Most products today are made using parts from different countries. For example, a mobile phone might use chips from Taiwan, batteries from China, and be assembled in Vietnam. Tariffs disturb this smooth system, leading to delays and higher costs.
3. Businesses Stop Investing
When governments fight using trade, companies become uncertain. They don’t know what will happen tomorrow. So, they reduce or delay new projects, hiring, and expansion. This leads to slower economic activity and fewer jobs.
4. International Trade Falls
If countries stop buying from each other, global trade volume reduces. This hurts exporting countries like India, which depends on selling IT services, textiles, and pharmaceuticals abroad.
What Are Experts Saying?
Economists and financial institutions are now openly warning that the trade war may trigger a global recession.
What big players are saying:
- JPMorgan CEO Jamie Dimon warned that tariffs could slow US growth and increase inflation.
- Goldman Sachs and Moody’s Analytics have raised recession risk forecasts for 2025.
- 92% of economists surveyed by Bloomberg say the trade war raises chances of a recession.
Many experts are comparing the current situation to the 2008 global financial crisis.
What Happened in Past Trade Wars?
This is not the first time trade wars have hurt the global economy.
Example: Smoot-Hawley Tariff Act (1930)
During the Great Depression, the US passed this law to protect local industries by taxing imports. But it backfired — other countries also added tariffs, international trade collapsed, and the global depression became worse.
US-China Trade War (2018-2020)
During Trump’s first term, tariffs on hundreds of goods were introduced. The IMF estimated that global GDP reduced by 0.8% due to these actions.
This shows that trade wars often create more damage than benefits — not only for the countries involved, but also for the world.
What Does This Mean for India?
India is not directly involved in this trade war. But still, the impact will be felt here in many ways:
1. Stock Market Volatility
Indian stock markets usually follow global trends. If US and Chinese markets crash, Indian markets also fall. Recently, Sensex and Nifty have already seen sharp drops due to global fears.
2. Inflation Pressure
If global prices rise due to tariffs, importing goods to India will also become costlier — especially electronics, raw materials, and oil. This can increase inflation in India too.
3. Export Slowdown
India exports a lot of goods and services to the US and other nations. If global trade slows, India’s exports may suffer, especially IT, textiles, and auto parts.
4. Currency Impact
When global investors get scared, they move money to safe assets like gold or the US dollar. This weakens the Indian Rupee and may lead to capital outflows from Indian markets.
Is There Any Way to Avoid a Recession?
Yes, there is hope — but strong action is needed.
1. Trade Negotiations
If the US and China agree to talk and reduce tariffs, global tension will decrease. In the past, even small agreements between them calmed markets.
2. Government Policies
Central banks like the RBI and the US Federal Reserve can take steps — like cutting interest rates, supporting small businesses, or increasing spending — to boost the economy.
3. Regional Cooperation
Countries like India, Japan, and Southeast Asia can increase trade among themselves, reducing dependence on the US or China.
4. Shift in Supply Chains
Companies may move their factories from China to countries like India, Vietnam, or Indonesia. This could bring more foreign investment and jobs to India.
What Should Indian People Do?
You don’t need to panic. But staying informed and prepared is smart.
If you’re an investor:
- Avoid risky or highly global-dependent stocks.
- Diversify your portfolio.
- Keep some cash or gold as safety.
If you’re a job-seeker:
- Focus on industries less affected by global trade — like healthcare, education, agriculture, etc.
- Upskill yourself in digital and technical fields.
If you’re a business owner:
- Try to find local suppliers instead of depending on imports.
- Build strong customer relationships and reduce unnecessary costs.
Final Thoughts: The Road Ahead
The US-China trade war in 2025 is not just a political drama — it has real consequences for economies, companies, and common people all over the world. If this tension continues, a global recession is likely. India may also face indirect effects like inflation, lower exports, and market pressure.
But all is not lost. Through smart policies, diplomatic efforts, and regional cooperation, we can reduce the damage. India also has the chance to position itself as a strong alternative to China in manufacturing and global trade.
In today’s connected world, cooperation is more powerful than confrontation. Hopefully, world leaders will realise this before it’s too late.
