As US President Donald Trump puts China in the direct line of fire for a trade war that has gone global – and seals the regional back doors Beijing used to avoid the worst of earlier tariff blitzes – analysts ponder the course the world’s second-largest economy will take to insulate itself and keep its hopes for sustained growth alive.
As part of Wednesday’s “Liberation Day” ceremony – which rewrote the US book on trade with a sweeping package of tariff increases applied to a broad swath of countries – Trump said an additional 34 per cent in tariffs would be applied to Chinese imports.
This upsurge, Gavekal Dragonomics analysts quipped, made the Great Depression-era Smoot-Hawley Tariff Act of 1930 “look tame”. In a Thursday note, they dubbed the China measures a “worst-case scenario” for the country.
“The final rates took everyone by surprise,” said Nick Marro, principal economist for Asia and lead analyst for global trade at the Economist Intelligence Unit.
“What’s really scary is the fact that this probably isn’t the end of the story for China. It’s highly likely that we could see further US tariff actions, either this year or later in Donald Trump’s term, meaning we could see the rate on China rise to unprecedented levels.”
The 34 per cent increase reflects a country-specific 24 per cent duty stacked onto a 10 per cent universal baseline. The baseline rate will take effect on April 5, while the higher rate will enter into force on April 9.
