China shrugs off Trump tariffs but bruising trade war looms
The 10 percent levy could knock out 40 percent of Beijing’s goods exports to the US
The 10 percent levy could knock out 40 percent of Beijing’s goods exports to the US
BEIJING (AFP) -- Donald Trump’s new tariffs will probably not have a major impact on China’s economy but may herald the opening salvo of another bruising trade war with Beijing, analysts said Sunday.
The United States President on Saturday announced sweeping measures against major trade partners, with goods from China facing an additional 10 percent tariff on top of the duties they already endure.
Trump said the measures aimed to punish countries for failing to halt flows of illegal migrants and drugs including fentanyl into the US.
However, his action against Beijing was “not a big shock to China’s economy,” according to Zhiwei Zhang, president of Pinpoint Asset Management.
Given Beijing had already factored in higher tariffs this year, the move was “unlikely to change the market expectation on China’s macro outlook,” Zhang said.
“I don’t think China needs to take action, such as exchange rate depreciation, to offset (the impact),” he added.
According to Bloomberg Economics, the 10 percent levy could knock out 40 percent of Beijing’s goods exports to the US, affecting 0.9 percent of Chinese gross domestic product.
That is a small fraction of China’s vast economy, but it would put extra pressure on policymakers already grappling with slowing growth, a property sector crisis, and sluggish domestic consumption.
‘First strike’
Experts said Trump’s focus seemed to be on trade relationships with Canada and Mexico more than China.
Under the new rules, Canadian and Mexican exports to the US will face 25 percent tariffs, with a partial exemption for Canadian energy resources.
But with targeted countries already vowing retaliation and Trump promising more duties in future, the move was “just the first strike in what could become a very destructive global trade war,” said Paul Ashworth, chief North America economist at Capital Economics.
China has said it will take “corresponding countermeasures” against the tariffs, but has not elaborated what form they might take.
Gary Ng, a senior economist at Natixis, said Beijing “may react by imposing reciprocal tariffs on US imports, limiting exports of critical materials, and restricting market
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