Analysis of the Impact of Sino-U.S. Trade Conflicts on the Manufacturing Cycle and Inflation

Recently, the trade relations between China and the United States have become tense again, raising market concerns about the manufacturing cycle and inflation prospects. This article will analyze the potential impacts of the trade conflict from the perspectives of the macro environment, capital flows, and market structure.

Macroeconomic Environment Analysis

The current US-China trade dispute has reached a stalemate, with both sides unwilling to make the first concession. This situation may persist for a while until the positions of other global economies have a significant impact. The attitudes of around 80 countries will play a key role in the US-China game, especially regarding the escalation of the trade war and the issue of supply chain restructuring.

In the long run, this game may shift from the current confrontation to a more complex interaction model. The support of global economies will determine whether China and the United States can resolve their differences through compromise or hardline measures. Ultimately, the stability and development of the global economy may be profoundly affected by this game.

Capital Flow and Market Sentiment

Recently, the market's liquidity has shown positive changes:

• ETF funds saw a significant inflow of 3.014 billion this week, indicating an improvement in the capital situation.
• The issuance of stablecoins increased by 2.17 billion this week, which is at a medium level.
• The OTC premium has slightly rebounded, but only at a minor premium.

Bitcoin's technical indicators are at a high position on the four-hour chart, and caution is needed regarding the risk of a pullback after a surge. On-chain data shows that the chip distribution has returned to around $93,000.

Ethereum's trend is relatively weaker compared to Bitcoin, with the ETH/BTC ratio breaking down, and funds continuously flowing back to Bitcoin. However, the increase in active addresses on the Ethereum chain may indicate that a phase of bottoming out has been completed.

The Impact of Trade Conflicts on the Manufacturing Industry

1. Enterprise Response

Multiple surveys indicate that businesses' concerns about tariff pressures have significantly increased:

• 30% of companies consider tariffs to be their primary concern.
• 19.2% of companies expect an increase in the price of intermediate goods.
• 32.3% expected raw material prices to rise by 3%-4%
• 41% of manufacturers expect that orders from China will be significantly affected.
• 60% manufacturers plan to reprice

Changes in Corporate Behavior:

• Export surge: 20% increase in exports from China, Vietnam, and Taiwan from January to March.
• Restocking: Customers reserve low-cost inventory, boosting Q2 stock.
• Order transfer: Textile and footwear production shifting to Vietnam/India, electronics shifting to Taiwan/Japan/South Korea/India, automotive parts shifting to Mexico/Canada

2. Short-term impact (Q2-Q3 2025)

• Strong hard data: China, Vietnam, and the United States see a 20% increase in imports and exports.
• Consumer electronics: PC/mobile Q2 shipments revised upward, but growth rate will drop to 0%-3% in 2025.
• Textile and footwear: Shoe prices rose by 11.6%, while sales dropped by 10%-15%.
• Cars: Q2 sales hit a record high, but demand may decline in the second half of the year.
• Inventory pressure: Manufacturers stockpiling to avoid tariffs, increased risk of inventory backlog in Q3

3. Medium to Long-term Impact (Q4-2026)

• Demand decline: Consumer electronics prices rise by 10%-20%, shipments flat in 2025
• Supply chain decoupling accelerates: China and the US each establish their own supply chain systems
• Rising costs: Manufacturing costs in the U.S. increased by 8%-15%
• Cycle downturn: The inventory destocking pressure peaks in 2026, and the manufacturing cycle deteriorates.

4. Market Impact

• US Stocks: The industrial sector is rising in the short term, while technology stocks are under pressure.
• Cryptocurrency: Risk appetite drives prices up, but inflation risks may lead to a correction.

Key Observations

• Soft data such as PMI and price expectations peaked in Q2-Q3.
• Q2 export/industrial production growth rate may slow down after Q3
• Guidance on tariff costs and demand in key enterprises' Q1 financial reports
• The Federal Reserve's assessment of inflation and potential policy adjustments

Conclusion

Short-term trade conflicts may stimulate exports and increase inventory, but in the medium to long term, they will suppress demand and accelerate supply chain restructuring. It is recommended to pay attention to indicators such as PMI and corporate earnings reports, and to cautiously layout in the manufacturing sector, considering beneficiaries of the Southeast Asian supply chain. At the same time, it is necessary to closely monitor inflation trends and their impact on monetary policy, and to make adjustments in asset allocation.