China-targeted tariffs by former American president would lead to significant revenue loss plus ‘economic and geopolitical repercussions’
Former US president Donald Trump‘s tariff plans, including additional duties on Chinese imports, could offset US$2.7 trillion of American debt in the next decade but could also trigger revenue loss with “geopolitical repercussions”, a study has found.
Trump’s fiscal proposals could add twice as much to the national debt compared to plans under US Vice-President Kamala Harris, according to a report by the Committee for a Responsible Federal Budget, a Washington-based non-profit group, on Monday.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
Trump has long advocated the idea of imposing high tariffs on US imports, arguing they could create jobs domestically and shrink the federal deficit.
Since launching his 2024 bid for the White House, the former president has proposed a 10 or 20 per cent universal tariff on all imports as well as 60 per cent duties on Chinese goods.
A 10 per cent universal tariff could raise US$2.5 trillion for the American economy, the report found, or up to US$4.30 trillion if Trump goes with a 20 per cent tariff. But either amount would fall far short of making up the costs of his other fiscal policies.
In addition, his tariff plans could lead to significant revenue loss, plus “economic and geopolitical repercussions”, especially with additional duties imposed on Chinese goods.
Trump during his first term as president took aim at Beijing with tariffs on more than US$300 billion worth of mainland imports, most of which remain in effect.
On the campaign trail for the November election, he has vowed to double down with more tariffs if re-elected, accusing the world’s second-biggest economy of being responsible for a large trade deficit with the US while “stealing” American jobs.
One of Trump’s prime targets is electric vehicles, having described them as a “green new scam”. At a rally in Wisconsin on Sunday, he threatened to impose tariffs as high as 200 per cent on Chinese EVs imported from Mexico.
EVs made on the mainland already face 100 per cent tariffs under US President Joe Biden, who said the product has undercut America’s manufacturing industry.
The Biden administration has also promoted a narrative of Chinese manufacturing being at “overcapacity”, urging American allies to address the challenge too.
Last week, the European Union voted in favour of additional tariffs of up to 35 per cent on Chinese EVs from November after initial negotiations with China fell through. The two agreed to continue talks, with the latest one scheduled on Monday, according to China’s commerce ministry.
Beijing has slammed the moves by Western nations as “indiscriminate” and “unfair”, saying they disrupt global supply chains. It has retaliated by imposing export controls on critical mineralsthat are essential for making EVs.
The report’s findings follow similar research that has warned of negative impacts on the US economy should Trump’s proposed tariffs on China come to fruition.
In September, the Tax Foundation, a Washington-based think tank, estimated the 10 per cent universal tariff and 60 per cent Chinese import tariff would reduce US GDP by roughly 0.8 per cent.
Meanwhile, a report last month by the Peterson Institute for International Economics, another Washington-based think tank, asserted that Trump’s tariff measures would result in weaker economic growth, higher inflation and job losses.
If China opted to retaliate, it added, US GDP would fall by more than 0.2 per cent below the baseline by 2026 and inflation would rise by 0.6 percentage points in 2025.
More Articles from SCMP
Spirit of Hong Kong Awards: meet the company saving the planet one lunchbox at a time
Hong Kong developers to make nearly 18,000 new flats available to homebuyers
Philippines moves to define sea routes, strengthening sovereignty against China
Manchester City triumph, wild scenes in US, what happened overnight in the world of sport
:
Trending6 months ago
Politics6 months ago
Politics6 months ago
Politics6 months ago