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The Impact of US Increased Tariffs on China’s Economic Development (No.97, 2019)


By Li Fan, Li Ying, Chen Cheng & Yan Xiaoxu, Research Team on “Sino-US Trade Relations”, China Development Research Foundation

Research Report, No.97, 2019 (Total 5597) 2019-6-21

Abstract: With reference to the views and opinions expressed by domestic and foreign scholars, international organizations and institutions, the research team reviewed the impact induced by US increased tariffs on China’s economic growth, employment, industrial transfer and relevant aspects. Sino-US economic and trade frictions seem to be difficult to be addressed in the short term, and the impact might be felt by the end of the third quarter or the beginning of the fourth quarter of this year. Under different scenarios, the US increased tariffs on China’s goods worth of $250 billion may lead to a Sino-US trade volume reduction by $20 to $100 billion dollars, impeding economic growth by 0.1 to 0.5 percentage points. It will cause concerns on the expectations of market entities and investors’ confidence. The impact would affect the employment of 0.75 to 3.7 million people, especially in the mid-to-high-end manufacturing industries. The Sino-US economic and trade frictions will largely change the landscape of global industrial chain. If the US administration imposes tariffs on all the Chinese commodities, it will bring about a more negative impact on the development of both economies. To deal with the above-mentioned frictions, positive and appropriate measures are needed to proactively comply with the short-term shocks. In addition, China needs to advance reform, enhance market expectations and keep smooth channels for rational dialogues with the U.S..

Key words: economic growth, Sino-US economic and trade frictions, tariff imposition, employment, industrial chain.