China’s Exporters Face Looming Trade War as Trump’s Tariff Threats Resurface

The success story of Li Wei, who transformed his family’s glass-making business into a thriving export operation, could be jeopardized if former US President Donald Trump wins the upcoming election, Al Jazeera reports.

Trump, known for his trade wars with China, has threatened to impose hefty tariffs on all Chinese imports, potentially setting off a new wave of economic instability.

Li, like many Chinese exporters, relies heavily on the US market, which accounts for a substantial portion of his company’s revenue. The possibility of a 60% tariff on his glass products has sent shockwaves through the industry, forcing Li to scramble for alternative export destinations.

A Global Economic Conundrum

The threat of “Tariff War 2.0” has economists concerned. Allan Von Mehren, chief analyst and China economist at Danske Bank, warns that additional tariffs could be a crippling blow for Chinese companies already struggling with the country’s economic slowdown.

UBS estimates that a 60% tariff could reduce China’s GDP growth by 2.5 percentage points over the next year, further exacerbating existing challenges like a faltering property sector and low consumer confidence.

Seeking Alternatives, but No Easy Replacements

Chinese firms are exploring alternatives, including partnering with manufacturers in countries like Indonesia. The Chinese government is also actively promoting trade with nations like Africa and South America, where China is already a significant trading partner.

However, it remains uncertain whether these efforts can compensate for the loss of the vast US market. Moreover, US restrictions on Chinese imports have triggered similar measures elsewhere. The EU has imposed tariffs on Chinese electric vehicles, mirroring a US ban. Trump’s threats to target Mexican imports, a potential destination for Chinese EV manufacturers, further complicate the situation.

Mutual Pain and a Possible Recession

While China has retaliated with its own trade measures, the impact of Trump’s tariffs would not be limited to China. The Peterson Institute for International Economics predicts a 0.4% rise in inflation in the US by 2025 and a 0.23% GDP loss by 2027. These figures would double if China retaliates.