Another escalation in the Middle East and stalled peace talks in the Ukrainian conflict have all taken a back seat amid Donald Trump's sweeping tariff measures against hundreds of countries. The focus is now on whether this is just a temporary bluff — a bargaining chip in negotiations — or a long-term policy shift, with further declines in the S&P 500 and the rest of the global markets ahead.          

Unfortunately, judging by Trump's own rhetoric, he seems pretty serious. In the case of China, it is looking more and more like a full-scale trade war. On Monday, the U.S. president issued a harsh ultimatum to Beijing: if China does not withdraw its 34% retaliatory tariffs by Wednesday, the U.S. will impose an additional 50% tariff on Chinese goods, bringing the total tariff to a staggering 104%.    

For its part, China is not giving in to what it sees as blackmail. Officials stated, "If the US insists on its stance, China will fight to the end.” Meanwhile, rumors circulated that Beijing sold $50 billion in U.S. Treasury bonds on Monday. While this cannot be independently confirmed, it would not be surprising if it were true.     

All signs point to the trade war heading towards a worst-case scenario: the world's two largest economies could begin to decouple, ushering in a new era of global polarization, especially in trade. This, in turn, could severely slow global economic growth, and markets are likely to react accordingly. 

Is there any hope that this nightmare will end soon?       

According to some reports, many economists consider the tariffs imposed by Trump to be absurd and lack any real scientific basis. They even question the formula used to calculate these tariffs. For example, Brett Neiman, a professor of economics at the University of Chicago, said the actual tariffs should be significantly lower, possibly only a quarter of current levels.      

Still, that alone is unlikely to push Trump's team to reduce the announced tariffs. However, a group of senators has introduced a bipartisan bill to strip the president of his power to impose tariffs unilaterally. Trump has already vowed to veto the bill, but Congress can override a presidential veto with a two-thirds majority vote. 

In the meantime, markets are likely to continue swinging wildly. But there is a glimmer of hope: several countries have shown a willingness to engage in trade talks. The EU, which had earlier threatened countermeasures, now says it is open to negotiating and even reducing industrial tariffs on both sides to zero. Japan has also expressed its willingness to talk.