US-China confrontation could escalate into 'all-out financial war'
The US-China confrontation risks escalating into an “all-out financial war” with no winners, Deutsche Bank’s global foreign exchange research expert warned.

The global financial system is entering “uncharted territory” as escalating trade tensions between the US and China could spiral into an “all-out financial war,” warned George Saravelos, global head of foreign exchange research at Deutsche Bank.
In a note to clients on April 9, quoted by multiple media outlets, Mr. Saravelos – an analyst who has repeatedly warned of an impending dollar crisis and a global loss of confidence in the U.S. currency – described the current situation as a “collapse” of the markets.
“We are witnessing a simultaneous collapse in the value of all U.S. assets, including stocks, the dollar against alternative reserve currencies, and the bond market. We are entering uncharted territory in the global financial system,” he wrote.
Global markets are de-dollarizing faster than expected, and it is unclear how “orderly” the process “can be,” Saravelos warned. The current situation appears different from “a typical crisis environment,” where markets “typically hoard dollar liquidity to secure funding for their U.S. holdings.”
“The dynamic now seems completely different: The market has lost confidence in U.S. assets, so instead of hoarding dollars to cover the credit-debt gap, it is now actively dumping those very assets,” Saravelos wrote, criticizing that the actions of the Trump administration are “fueling the sell-off in U.S. government bonds.”

The warning comes amid a deepening trade war between the US and China that could have serious consequences for the global economy and lead to an “all-out financial war”. Mr Saravelos said the extreme tariffs imposed by President Trump have virtually closed the door to further escalation in trade. China now “appears to be maintaining its ability to weaponise its currency while simultaneously signalling a more supportive policy for its domestic economy”, he added.
“The next phase risks becoming a full-blown financial war involving Chinese ownership of U.S. assets, both public and private. It is important to note that there will be no winners in this war: Both the owner (China) and the issuer (the United States) will be harmed. The loser will be the global economy,” he stressed.
China has become a key target in President Trump’s efforts to redress the US trade imbalance, with retaliatory tariffs imposed on most countries around the world. In March, Trump imposed a 20% tariff on Chinese imports, which was increased by 34% last week. China retaliated with a 34% tariff on US goods – which Trump then raised to 50%, bringing the total to 104%.
This week, China increased tariffs on US imports by another 50%, bringing the total to 84%. President Trump immediately responded by raising tariffs to 125% on April 9—even before China’s new measures took effect.