In the latest episode of Horizons Middle East and Africa, host Joumanna Bercetche discusses significant developments in global trade and economic relations, particularly focusing on the escalating tensions between the U.S. and China. President Trump is pressing China to make a tariff offer to ease trade tensions while simultaneously threatening to impose duties on critical mineral imports. The situation is further complicated by the U.S. ban on Nvidia’s H20 chip sales to China, which the company warns could cost it billions of dollars. Despite China’s economy showing unexpected growth in the first quarter of 2025, the looming trade war casts a shadow over future economic prospects.
The markets have reacted negatively to the recent trade developments, with U.S. tech stocks, particularly Nvidia, experiencing significant declines. The Hang Seng index in Hong Kong fell by 2.5%, despite positive GDP data from China, as investors remain wary of the potential impacts of the trade war. European trade negotiators have also struggled to make progress in discussions with the U.S., leading to a pessimistic market sentiment reflected in falling futures for major indices like the S&P and NASDAQ.
In a broader context, the U.S. Treasury market is showing signs of stabilization after a period of volatility, with yields trading around 4.32%. The upcoming retail sales data and comments from Fed Chair Jerome Powell are anticipated to provide further insights into monetary policy direction. Meanwhile, the U.S. dollar is experiencing selling pressure, with investors seeking refuge in safe-haven assets like gold, which has reached all-time highs.
The geopolitical landscape is also shifting, with President Trump urging China to engage in negotiations to resolve the trade conflict. However, both sides appear unwilling to compromise, leading to a stalemate. The Trump administration’s focus has shifted from imposing tariffs to considering export controls, which could further escalate tensions. Analysts suggest that the U.S. is prioritizing negotiations with larger trading partners, leaving smaller nations, including those in sub-Saharan Africa, at a disadvantage in trade discussions.
Finally, the episode touches on the implications of these trade tensions for Dubai’s real estate market, which has seen a 70% price increase over the past four years. Experts predict that while a crash is unlikely, a moderation in growth or a potential decline in property prices could occur if the trade war continues and oil prices drop. Developers are currently cautious, with some opting not to raise prices to maintain market stability. The episode concludes with a reminder of the complexities of the global economic landscape and the interconnectedness of trade relations.
