Potential U.S. Tariffs on China Could Impact Global Growth Trajectory

The U.S. may impose nearly 40% tariffs on Chinese imports by early 2025, potentially shaving up to 1 percentage point off China’s economic growth, according to recent economic projections. This follows campaign pledges by President-elect Donald Trump to implement aggressive “America First” trade measures, creating concerns over economic ripples in China.

Economists predict China’s growth rate may decline by 0.5 to 1 percentage point in 2025 if the tariffs are implemented. Despite this, median growth forecasts remain steady at 4.8% for 2024 and 4.5% for 2025, with potential revisions depending on the actual policy. Analysts emphasize that exports will remain a critical growth pillar for China, though challenges from new U.S. trade barriers and tepid domestic consumption could create headwinds.

To mitigate the impact of potential tariffs, analysts expect Chinese authorities to introduce new fiscal and monetary stimulus measures. While recent government efforts have been aimed at achieving a 5% growth target for 2024, most surveyed experts believe additional actions will be necessary. Economists anticipate the People’s Bank of China will cut its key policy rate early next year to support economic activity.

These developments underline the interconnected nature of global trade and policy. The potential escalation of U.S.-China trade tensions could influence not only these two major economies but also broader global markets, making this a pivotal issue to watch in the months ahead.