China raised tariffs on American imports to as high as 125% on Friday, striking back at President Donald Trump’s decision to increase duties on Chinese goods. The move escalates an already tense trade conflict, fueling concerns over global supply chain disruptions.

Despite the volatility, U.S. stocks ended the week on a positive note. However, investor anxiety was evident elsewhere: gold surged to a new record, and yields on 10-year U.S. Treasury bonds recorded their sharpest weekly rise since 2001. At the same time, the U.S. dollar dropped, signaling a decline in investor confidence in the American economy.

Consumer surveys show inflation worries are at their highest level since 1981.

“Recession risks have risen dramatically compared to just a few weeks ago,” said Adam Hetts, global head of multi-asset at Janus Henderson.

Around the world, leaders are still trying to navigate the fallout from what many consider the most significant disruption to global trade in decades. The U.S. administration has stood firm, pointing to ongoing trade negotiations to justify its tough stance.

Analysts warn that if tariffs between the U.S. and China continue to escalate, trade between the two countries—worth more than $650 billion last year—could grind to a halt.

“The president’s message is clear: if the U.S. is struck, it will strike back harder,” said White House Press Secretary Karoline Leavitt.

The dollar’s decline and the bond market sell-off reflect growing uncertainty. The yield on the 10-year Treasury note rose to a two-month high, climbing nearly half a percentage point over the week. This uptick could push up interest rates across the economy.

Treasury Secretary Scott Bessent is reportedly keeping a close eye on bond market developments.

Meanwhile, fresh inflation data revealed that while broad price pressures remain contained, the Producer Price Index for March showed rising costs for industrial metals—driven by tariffs on items like steel and aluminum, now in place for a month.

“Tariffs will likely have a greater impact on future inflation than past data suggests,” said Bill Adams, chief economist at Comerica Bank. “If these measures remain, inflation could accelerate in the coming months.”

The University of Michigan’s Consumer Sentiment Index dropped to 50.8 in April, down from 57.0 in March. Notably, this latest survey reflected a growing sense of unease even among Republican voters.