That raises the stakes enormously, with some economists predicting a halving or worse of Chinese exports to the U.S. – worth US$385.2 billion in 2016 according to the General Administration of Customs – if a 45 percent tariff is introduced.
More importantly, the direct export losses from the imposition of such tariffs would represent only a small part of Beijing’s troubles in a trade war against the U.S., with the global trade system that has boosted China’s prosperity and economic might over the past two decades unlikely to survive the conflict.
Kevin Lai, research head for Asia excluding Japan with Daiwa Capital Markets, wrote in a research note that punitive tariffs of 45 percent would lead to an 87 percent fall in China’s exports to the U.S., while HSBC economists led by Qu Hongbin predicted they would result in a halving of Chinese shipments to the U.S.
More from the South China Morning Post :
Trump’s anti-China trade chief is no economic illiterate
‘Sino-US trade frictions loom’ with Trump’s new pick for policy adviser
Donald Trump has got it all wrong when it comes to imposing tariffs on Chinese goods
The U.S. is China’s biggest export market, accounting for 18 percent of total exports, and China’s overall exports would be expected to shrink at least 9 percent if Trump carried through with his tariff threat. There would also be significant suffering due to the collapse of businesses and job losses, with Lai estimating that China’s gross domestic product could be trimmed by 4.8 percent.
Shen Jianguang, chief Asia economist at Mizuho Securities, estimated that China’s exports had created 120 million jobs, including 20 million making products for the US market.
More broadly, a full-blown trade war between Beijing and Washington could encourage other countries to become hostile to Chinese products, thus wrecking China’s powerful export machine, warned Professor Yu Miaojie, from Peking University’s National School of Development.
“What is more worrying is that other countries may follow suit,” he said. “As a result, Chinese exporters may not only lose the U.S. market but also the wider market in advanced countries.”
In fact, the European Union, China’s second-biggest export market, is also getting increasingly frustrated with a flood of cheap Chinese products and curbs on access to the Chinese market.