Donald Trump is still taking a tough stance on China and some investors are starting to wonder who who will suffer if he puts words into action.
The ramifications of the president-elect’s talk of a punitive 45 percent tariff imports from China, the world’s second-biggest economy, are of the most concern to some businesses. The current average tariff on imports from China is about 3 percent, according to the U.S. International Trade Commission.
Some economists say that tariffs could slow China’s economy by 3 percentage points. “The direct impact on GDP would be sizable. The value added by exports is about 10 percent of China GDP, and the U.S.A accounts for about one-fifth of China exports,” Gene Ma, chief economist for China at the Institute of International Finance, said.
Big U.S. retail chains including Wal-Mart and others sell a large amount of merchandise made in China to consumers in America. Low production costs in Asia and Latin America mean cheap imports to the United States, but tariffs would increase the cost of selling Chinese-made goods into the U.S.A.