China Trade Deal in Jeopardy as Trump’s 104% Tariff Announcement Sends Shockwaves
The US-China trade war has escalated, with the US imposing a 104% tariffs on Chinese goods. This move has raised concerns about the global economy, with potential implications for supply chains and economic growth. Goldman Sachs forecasts China's growth to drop to 4.5%, short of its 5% target for the year, due to the tariffs.
US President Donald Trump’s latest announcement of a 104% tariff on Chinese products has put the China trade deal in jeopardy. This newest round of sweeping tariffs, now fully in effect, will significantly impact China’s economy.
According to Goldman Sachs, the 104% total tariff on Chinese goods could slash Beijing’s growth by 2.4 percentage points. This warning comes as the tariffs are now entirely in effect, with China facing unprecedented trade pressures.
Trump Tariff Economic Implications
Goldman Sachs forecasts China’s growth to drop to 4.5%, short of its 5% target for the year. The tariffs could heighten economic strain on global supply chains and increase uncertainty for investors and businesses worldwide.
Due to escalating trade tensions, China’s 5% economic growth target for the year may fall short. These new stiff tariffs took full effect just after midnight on Wednesday, 9th April, following his April 2nd announcement that nearly all US trading partners would face a minimum 10 per cent import tax—with far steeper rates for countries running trade surpluses with the United States.
China Feels the Hit
Goldman Sachs notes that the economic impact of tariffs on China won’t be strictly linear. Since China is often the dominant or sole supplier for many goods, finding quick alternatives will be challenging.
The full 104% tariff, consisting of prior levies and a 34% hike last week, is expected to significantly damage Chinese exports. Goldman Sachs, however, suggests that further increases may have diminishing effects due to the existing dependency on Chinese goods.
Beyond China, the US has rolled out new tariffs affecting dozens of countries and territories, with some facing unprecedented tax rates on goods entering the US. The tariffs are part of a broader trade policy shift with potential implications for global supply chains and economic growth.
Moreover, the government placed 50% tariffs on smaller economies like Lesotho, 47% tariffs on Madagascar, 46% tariffs on Vietnam, 32% tariffs on Taiwan, 25% tariffs on South Korea, 24% tariffs on Japan, and 20% tariffs on the European Union.
The US and China are locked in a trade war, with both sides digging in. Beijing has vowed to retaliate against US tariffs, prompting Trump to threaten an additional 50% levy on Chinese goods. This tit-for-tat exchange has raised concerns about the economic strain on global supply chains and increased uncertainty for investors, businesses, and consumers worldwide.
