The US could impose nearly 40 per cent tariffs on imports from China early next year, potentially slicing growth in the world's second-biggest economy by up to one percentage point. According to a poll by the news agency Reuters, the US President-elect will resist starting with blanket 60 per cent tariffs on Chinese goods. Donald Trump, after his sweeping election victory on November 5, is due to take office in January.
Trump pledged during campaigning to slap hefty tariffs on Chinese imports as part of a package of "America First" trade measures, causing unease in Beijing and heightening growth risks for China. Not only are the threatened tariff rates much higher than the 7.5 per cent-25 per cent levied on China during his first term, the economy is also in a much more vulnerable position given the prolonged property downturn, debt risks and weak domestic demand.
The poll showed a strong majority, both in and outside mainland China, expects Trump to impose the tariffs by early next year, with a median estimate of 38 per cent and projections ranging from 15 per cent to 60 per cent. However, most economists also said they do not expect blanket 60 per cent tariffs on Chinese goods in early 2025 as this could accelerate inflation within the US.
"We expect the new US administration to bring back the original plan of Trump 1.0," ANZ's chief economist Raymond Yeung said, estimating that the average tariff on Chinese goods could be raised by 32–37 per cent.
Chinese policymakers, who have ramped up stimulus to spur growth since late September, face increased pressure next year to spur domestic demand to offset an expected drop in exports - a key growth driver this year, analysts say. On the potential impact on China, the poll predicted that new US tariffs would reduce China's 2025 economic growth by around 0.5-1.0 percentage point.
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For now, however, most economists polled have maintained their median growth forecasts for this year and 2025 at 4.8 per cent and 4.5 per cent, respectively, consistent with projections made before the US elections. Growth is expected to slow further to 4.2 per cent in 2026. They are awaiting the Trump administration's China trade policies, which could lead to potential downgrades in their outlooks.
“Exports will be a key pillar of growth as global demand holds up, though new US tariffs could shave up to 1 percentage point off GDP growth,” Mo Ji, chief China economist at DBS, told Reuters. “Consumption will remain lacklustre due to wealth effects from falling property prices and rising unemployment. Though private investment lags, infrastructure investment will drive a moderate fixed asset investment recovery.”
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A strong majority of economists, or 19 of 23 who responded in the poll, said the recent fiscal and monetary stimulus measures announced by the Chinese government have had little impact on the economy and more stimulus is needed. Only four said that these measures would boost economic growth.
Chinese authorities hope the burst of stimulus unveiled in late September will help the economy reach a government growth target of around five per cent this year. According to analysts, China is likely to unveil fresh stimulus measures in the coming weeks to help cushion the economy from any trade tensions with the US, who expect the economy's slowing trajectory will continue despite policy support.
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Economists polled by Reuters have also lowered their consumer price inflation forecasts to 1.1 per cent for next year and 1.4 per cent for 2026, down from the previously expected 1.4 per cent and 1.6 per cent in the October survey. The People's Bank of China is expected to cut its key policy rate - the seven-day reverse repo rate - by 20 basis points to 1.30 per cent early next year, with an additional 10 basis point reduction in the second half, according to the poll.
