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How Would The Trade War Affect China'S Pib Growth?

1. A trade war between the US and China would significantly hurt both countries' economies according to recent studies. The IMF estimates that if tariffs rose to 25%, Chinese exports to the US would fall by 25% and US exports to China would fall by 36%, reducing both countries' GDP. However, China and the EU may be less impacted as they could capture some redirected trade. 2. Past trade wars have led to deep global recessions as world trade declined sharply. Businesses are very worried about the current uncertainty caused by the escalating tensions and tit-for-tat tariffs between the US and China. There are fears this could spiral out of control and hurt economic growth worldwide unless negotiations resume successfully.

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50 views2 pages

How Would The Trade War Affect China'S Pib Growth?

1. A trade war between the US and China would significantly hurt both countries' economies according to recent studies. The IMF estimates that if tariffs rose to 25%, Chinese exports to the US would fall by 25% and US exports to China would fall by 36%, reducing both countries' GDP. However, China and the EU may be less impacted as they could capture some redirected trade. 2. Past trade wars have led to deep global recessions as world trade declined sharply. Businesses are very worried about the current uncertainty caused by the escalating tensions and tit-for-tat tariffs between the US and China. There are fears this could spiral out of control and hurt economic growth worldwide unless negotiations resume successfully.

Uploaded by

CARLOS SUAREZ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1. HOW WOULD THE TRADE WAR AFFECT CHINA'S PIB GROWTH?

The organization simulated the effect on the world economy of a stronger-than-


expected Chinese slowdown: a two-point drop in China's PIB Japan, the other East
Asian countries, raw material producers and Germany would be particularly
affected. The various international institutions do not agree on the estimate of
losses, although they confirm the red numbers. The IMF recalls that in the event of
a bilateral increase in tariffs to 25%, both countries "would suffer the greatest
losses. Chinese exports would fall by 25% and those from the United States to
Beijing by even more: 36%. The cuts in PIB A recent study by the European
Central Bank estimates that this policy would be disastrous precisely for the United
States. In the event of a large-scale global trade war, US GDP would fall by 2.2%,
also due to the loss of investment confidence. Curiously, China and the European
Union would hold up better, because they would capture part of that trade
diversion. Europeans would barely notice variations, while the Chinese would gain
a few tenths of their PIB by taking advantage of the Asian trading space.
2.IN THE EVENT OF ECONOMIC DISINTEGRATION, HOW WOULD IT AFFECT
INTERNATIONAL TRADE?
It is the question asked by every businessman, and the answer is almost always
the same: nobody knows. If history serves as a guide, past trade wars have
caused a deep economic malaise. In particular, the U.S. Smoot-Hawley tariffs
enacted in 1930 are believed to have inspired a trade war and led to a massive fall
in world trade. As one study points out, world trade declined by 66% between 1929
and 1934, while U.S. exports and imports to and from Europe also fell by about
two-thirds. Although no one says we are at that point yet, businesses are more
worried than before, especially about all the uncertainty. The "eye for an eye"
mentality between Beijing and Washington could lead both sides not to want to get
out of their hostile positions for fear of losing. But what many businessmen hope, of
course, is that this fury will be the beginning of another round of negotiations. The
concern is that, if it is not, it will escalate and we will all be poorer. And that
includes you and me.
Fears about the weakening of the Chinese economy were already passing and
President Donald Trump announced a trade agreement to be signed soon. That
improved the prospects for Asian economies that depend on world trade like
Japan, South Korea and Taiwan. Europe, a source of perpetual concern, also
showed signs of renewal. And, defying the skeptics, the U.S. economy held.
To begin with, many Chinese products will be affected by 25% tariffs. And this will
make them 25% more expensive for US consumers. This includes technological
products such as semiconductor chips, which are assembled in China and are
needed for everyday products such as televisions, computers, cell phones and
vehicles. There is also a wide variety of products from plastics to nuclear reactors.
But according to the Petersen Institute for International Economics, more than 90
percent of the products that will be adversely affected by U.S. tariffs are made from
intermediate products or capital goods - products that are needed to make other
kinds of products.
And this means that tariffs could impact other goods, not necessarily traded
exclusively in the U.S.
But what the U.S. is really trying to undermine with its measures are products
under the Chinese "Made in China 2025" initiative.

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