Trade War

Trump’s punitive tariffs not only harmful to China but also the whole of Asia

Until now China’s economy has managed to withstand the imminent burdens of the US-Chinese trade conflict, as indicated in the latest data on economic growth. However, this is likely to change soon as higher tariffs to the tune of USD 250bn – i.e. two percent of the country’s economic output – are imposed on Chinese exports as the next escalation level in the trade dispute with the US takes off. This now represents more than just a slight risk to the country’s economic growth. Exports to the USA will clearly not collapse in full as a result of the import duties, but they can be expected to decline sharply. The extent of this depends above all on how sensitively US consumers and companies react to the increase in prices for imported goods from China. Based on numerous empirical studies, we assume a value of -2 for the so-called price elasticity…