How will China's economy be affected if Mr. Trump returns to the White House and imposes tariffs?

China's growth is projected to be 4.6% next year and 4.2% in 2026. These figures would fall to 3% in both years if the US actually imposes tariffs.

Raising US tariffs to 60% would significantly slow China's growth rate. (Source: Getty Images)

In early 2024, former President Donald Trump was reportedly considering a fixed 60% tariff on Chinese imports should he return to the White House.

UBS Group stated in a recently published report that the aforementioned policy would reduce China's gross domestic product (GDP) by up to 2.5 percentage points by 2025.

This financial institution's forecast is based on the assumption that some trade is diverted through third countries, Beijing does not retaliate, and other countries do not join Washington in imposing tariffs.

Economists at the bank believe that half of the drag will come from a decline in exports, while the other half will be due to the impact on consumption and investment.

In its report, UBS stated that increased exports and production in other economies could help mitigate the impact of higher US tariffs, but there remains a risk that other countries may also increase tariffs on imports from China.

Exports are a strong growth driver for the world's second-largest economy in 2024, with net exports accounting for 14% of growth so far and the trade surplus rising to a record high in June 2024.

However, the Northeast Asian nation's export strength has drawn complaints from its trading partners.

An increasing number of countries are imposing tariffs or considering measures to counter China's trade imbalances.

According to a UBS Group report, Beijing's retaliation could also exacerbate the impact of tariffs, as it would drive up import costs.

In the event of another trade war, the risks and uncertainties alone could cause American importers to leave this market, even if tariffs are eventually reduced.

UBS forecasts that China will grow by 4.6% next year and 4.2% in 2026. Those figures would fall to 3% in both years if the tariffs are actually implemented, even if Beijing implements stimulus measures to counteract the impact of those tariffs.

Source: https://baoquocte.vn/kinh-te-trung-quoc-bi-anh-huong-the-nao-neu-ong-trump-tro-lai-nha-trang-va-ap-thue-278895.html