The new 34 per cent duty imposed by the US on Chinese exports could impact China’s gross domestic product (GDP) by 2 to 2.5 per cent, further impacting the already sluggish Chinese economy.
Larry Hu, chief China economist at investment bank Macquarie, estimates that the latest US retaliatory tariffs could reduce China’s exports by 15 percentage points. This could reduce GDP growth by two to 2.5 percentage points.
“The impact could be reflected through a variety of channels, such as a drop in US demand for Chinese goods, a possible global economic slowdown and export redirection,” Hu wrote in a research report, according to a report published in the Hong Kong-based South China Morning Post on Monday.
China has set a 5 percent GDP growth target this year for its economy, which is struggling with sluggish domestic consumption and a crisis in the housing sector. The latest 34 percent tariff brings total duties on Chinese exports to 54 percent.