Speculation is growing that the high tariffs on Chinese imports promised by President-elect Donald Trump, set to take office on January 20, could end up being closer to 20% instead of the previously suggested 60%.
According to a South China Morning Post report, Jan Hatzius, chief economist at Goldman Sachs, expects the Trump administration’s tariff policy to be more moderate than his campaign rhetoric suggested. Hatzius noted that while Trump pledged a 60% tariff on all Chinese imports, they anticipate an average of 20% for most goods. He further projected that a 20% tariff could potentially reduce China’s GDP growth by about 0.7 percentage points. Previously, Goldman Sachs had forecast China’s GDP growth at 4.9% for 2024 and 4.5% for 2025.
Hatzius also suggested that the Trump administration might still impose higher tariffs on certain Chinese imports. However, the focus would likely be on capital and intermediate goods rather than consumer products to avoid a major hit to American households. Items such as solar panels, steel, and aluminum could see steeper tariffs of up to 60%. The U.S. already applies a 50% tariff on Chinese solar panels and a 25% tariff on Chinese steel and aluminum.
Concerns are escalating that if Trump implements the proposed tariffs, China might retaliate, potentially igniting a global trade war that could stoke inflation. Jan Hatzius noted that China is bracing for such an eventuality and has prepared several countermeasures. He explained that China could restrict exports, leverage its U.S. Treasury holdings, or impose stricter regulations on American companies operating within its borders. Indeed, China has already taken its first retaliatory step by banning the export of critical minerals necessary for semiconductor production, including gallium, germanium, and antimony.
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