ANZ details expected hit to China's GDP growth from Trump's tariffs
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The news: China can expect a 0.5 percentage point hit to GDP growth over the next four years from the additional tariffs announced by US President Donald Trump on 1 February, according to an analysis from ANZ.
This does not taken into account any indirect impacts on China from the US imposing tariffs on other countries, which the bank says cannot yet be estimated.
The numbers: ANZ's analysts looked at 10,300 products and concluded that the extra 10% tariff imposed by the US will result in a 23% effective tariff rate on Chinese imports.
This is expected to lead to a 20% drop in Chinese exports to the US over the next four years.
In 2025, the bank anticipates an immediate fall in exports of about 5%, or 0.65% of China’s total exports, worth 0.12 percentage points of total GDP.
Context: One of the challenges in undertaking this type of estimate is accounting for behaviour changes in anticipation of tariffs.
For instance, the ANZ analysts point out that when Trump began discussing the potential for tariffs after being elected in 2016 there were expectations developed by the market and this “likely altered trade behaviour accordingly”.
There was a 15% increase year on year in exports from China to the US in 2017 before tariffs were imposed, which was double the average annual growth rate. In 2019, there was a 24% decrease. In 2024, this “front-loading” behaviour has also been observed.
What they said: "We remain cautious of US policy towards China. If the additional tariff does not reduce the trade deficit, further measures are possible," the ANZ analysis says.
The source: ANZ analysis
