Xi Has a Plan to Ease Tariff Pain. What About Trump?
While China is empowering consumers, the White House is doing the opposite.
China is playing its cards right in the tariff war.
Photographer: Raul Ariano/BloombergXi Jinping is standing up to Donald Trump. Throwing away past restraints, China’s tit-for-tat response to the 34% tariff the US imposed on April 2 is unnerving global investors. What prompted Xi’s change of tactic? Is a grand bargain between the two presidents off-the-table?
Make no mistake: Both countries will suffer from Trump’s punitive measures. Exports have been a rare bright spot in China. US tariffs announced this year, which bring the total effective rate on Chinese goods to 58%, could drag economic growth down by 1.7 percentage points, according to Goldman Sachs Group Inc. estimates. The actual impact is probably larger. Since Trump’s first trade war in 2018, Chinese companies have been rerouting and selling to the US through Vietnam and Mexico, which have also been slapped with higher levies. Meanwhile, economists are seeing stagflation in the US. JPMorgan Chase & Co. and Barclays Plc are forecasting an outright economic contraction this year.