Trump's Tariffs: A Double-Edged Sword in US-China Trade Relations

The U.S. has imposed new tariffs on Chinese exports, further straining an already struggling Chinese economy. The tariffs are expected to reduce China’s GDP by 2-2.5 percentage points. In response, China has retaliated with tariffs on U.S. exports, affecting both economies significantly.

The aggressive tariff strategy adopted by former U.S. President Donald Trump continues to cast a long shadow over U.S.-China trade relations. The latest levy of 34 percent on Chinese exports is projected to dent China's GDP by an estimated 2 to 2.5 percentage points, according to Larry Hu, chief China economist at Macquarie.

With President Joe Biden maintaining these tariffs, China faces significant challenges as its export-driven economy grapples with stagnated domestic consumption and a housing sector crisis. Hu's analysis suggests a 15 percentage point decline in China's exports, exacerbating the economic slowdown.

In a tit-for-tat move, China has imposed equivalent tariffs on U.S. agricultural goods and restricted rare earth metal exports, disrupting high-tech sectors in the U.S. The Chinese government is urged to rebalance its economy to prioritize domestic consumption to ensure economic stability and growth.

(With inputs from agencies.)