The global economy is standing at the edge of chaos, and America is at the center of it. China just let its currency, the yuan, sink past a level it had fiercely protected for weeks. The decision is a shot fired in what could become a full-blown economic war, and Washington isn’t sitting still. President Donald Trump, who has spent years accusing China and others of using cheap currencies to crush U.S. businesses, is back and ready to start drama. Trump has always had a bone to pick with exchange rates. Last June, he called out China and Japan, accusing them of rigging their currencies to pile “a tremendous burden” on American companies. His weapon of choice? Tariffs. He spent his first administration threatening and slapping tariffs to force foreign currencies to appreciate. With the yuan now weaker than ever, this is the opening act of what could define 2025. Currency wars are nothing new, but they’re always bad news Currency wars are a tale as old as time, and they don’t end well. The 1930s are a case in point. Back then, nations played dirty, devaluing their currencies and jacking up tariffs. It was called “beggar-thy-neighbor” economics, and it wrecked global trade. A study by economists Kris Mitchener and Kirsten Wandschneider showed that those tactics slashed trade by 18%. Countries started looking inward, focusing on their own problems and leaving the global system to rot. Franklin D. Roosevelt drove the point home in 1933 when he skipped a global economic conference in London and went sailing instead. That set off a domino effect—over 70 countries devalued their currencies, throwing international trade into disarray. The fallout didn’t stop there. The world learned its lesson the hard way, and after World War II, the U.S. changed its tune. It led the charge to build institutions like the International Monetary Fund, fostering cooperation and trade. Even in 2008, when the global financial system was on the brink, the U.S. worked with G20 nations to avoid repeating the mistakes of the past. But Trump? He’s dragging the playbook back to the 1930s, and the stakes couldn’t be higher. Trump’s tariff threats are a ticking economy time bomb During his campaign, he floated a 20% universal tariff and a 60% tariff on China. Those numbers didn’t stick, but the attitude did. Economists predict that Trump and Chinese President Xi Jinping might strike a deal to keep tariffs and export controls at manageable levels. But here’s the thing—deals only work if both sides play nice. If either Washington or Beijing miscalculates, the fallout could escalate fast. And history has shown us what happens when economic tensions spiral out of control. The yuan’s decline is a political statement. China’s domestic demand is stagnant, and its interest rates are at rock bottom. Letting the yuan weaken makes sense for Beijing, but it’s a red flag for Trump. He doesn’t care about the “why.” He’s focused on the “what,” and what he sees is a currency undercutting U.S. competitiveness. The effects of this showdown are already being felt. Goldman Sachs predicts global growth will hold steady at 2.7% in 2025, mirroring 2024. The U.S. economy is expected to grow by 2.5%, way ahead of the eurozone’s 0.8%. Inflation is easing, dropping from 6.8% in 2023 to 4.5% by 2025. That’s giving central banks room to cut rates, with the Fed aiming for 3.25%-3.5%. Emerging markets aren’t so lucky. Growth is slowing to 4.2%, hit by trade tensions and structural issues. The eurozone is also struggling, weighed down by new tariffs and a shaky economic outlook. And all of this is happening against the backdrop of a potential U.S.-China standoff. A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.
