By Anthony Marcus, correspondent. Eurasia Business News, November 21, 2024. Article no.1315.

The U.S. president elect Donald Trump is expected to impose nearly 40% tariffs on Chinese imports starting in early 2025.

This move, part of his “America First” trade policy, aims to reshape global trade dynamics and could significantly impact China’s economy, potentially reducing its growth by up to 1-1.5 percentage point according to economists surveyed.

The tariffs are notably higher than those implemented during his previous term, which ranged from 7.5% to 25%.

Economists predict that while the average tariff might be set between 32% and 37%, a blanket 60% tariff is unlikely due to concerns about inflation in the U.S. The anticipated tariffs come amidst ongoing vulnerabilities in China’s economy, including a property slump and rising debt risks, which have led to increased pressure for domestic stimulus measures.

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In addition, expectations of higher inflation resulting from Trump’s policies are pushing the dollar higher, creating problems for Asia’s central banks.

The dollar’s value has risen since Donald Trump’s re-election in part because his proposed massive tariffs, tax cuts and crackdown on immigration are expected to push up inflation. That would force the Federal Reserve to keep interest rates higher for longer—a bet that can be gleaned from a meaningful rise in bond yields. Higher rates tend to make a currency more attractive. All of this would give Asia’s central banks serious problems.

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© Copyright 2024 – Eurasia Business News. Article no. 1315.