If U.S. President-elect Donald Trump takes office early next year and the U.S.-China trade war intensifies, China's economic growth rate will fall by 2 percentage points, according to Macquarie Group, an Australian global investment management company.
According to Bloomberg News on the 6th, Macquarie economists predicted that if Trump's campaign promise to raise tariffs on Chinese products to 60%, exports to China could fall by about 8% the following year.
Given the hit to corporate capital spending and corporate confidence, the impact of U.S. tariff hikes on China's GDP, Macquarie said, would be significant.
If growth takes a hit, Chinese officials will be forced to step up policy support for the economy, Macquarie said, and a stimulus package worth more than 3 trillion yuan and 582 trillion won in our money may be needed to offset the 60% tariffs.
In addition, it estimated that an additional 3 trillion yuan would be needed to overcome the sluggish domestic demand.
Bloomberg Economics forecasts that if China responds to tariff hikes with retaliatory tariffs in the U.S.-China trade war, U.S. GDP will fall by 0.8 percentage points and inflation will rise by 4.3 percentage points by 2028.
If other countries besides China retaliate, the impact on U.S. growth will be greater, lowering U.S. GDP by 1.3 percentage points, and weakening the U.S. economy, raising inflation by just 0.5 percentage points.
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