China's GDP Impacted by 2.5% Due to New US Tariffs

On April 7, a new 34% tariff imposed by the United States on Chinese exports is expected to impact China's Gross Domestic Product (GDP) by 2 to 2.5%, further exacerbating the already sluggish Chinese economy. Larry Hu, the chief China economist at investment bank Macquarie, estimated that the new US tariffs could reduce China's exports by as much as 15%. This would significantly slow down China's GDP growth.

According to a report published in the South China Morning Post on April 7, Hu wrote in his research that "the impact can be seen in several ways, such as reduced demand for Chinese goods in the US, a potential global economic slowdown, and disruptions to export redirection." This will also affect China’s economy, which has been facing sluggish growth due to weak domestic consumption and a housing sector crisis.

China's GDP Growth Target for This Year

China has set a target of 5% GDP growth this year, but the country has been struggling due to sluggish domestic consumption and a housing sector crisis. With the latest 34% tariff, the total tariff on Chinese exports to the US has now reached 54%. In President Donald Trump’s first term, China was hit with a tariff of approximately 15%, which President Joe Biden maintained even after taking office.

Trade Between China and the US

In the previous year, China's exports to its third-largest market, the United States, were valued at $438 billion, while its imports from the US were $143 billion. President Trump imposed tariffs on Chinese products, accusing China of failing to stop the flow of raw materials for fentanyl production, a potent opioid drug.