High Tariffs on Chinese Imports: A Risky Game with Potential Consequences

Higher tariffs on Chinese exports could prove to be a double-edged sword: while such measures increase prices for consumers, China has the resilience to withstand such "external shocks." This assessment was made by Wang Shouwen, China's Deputy Minister of Commerce, at a press conference in Beijing. Wang was responding to the plans of US President-elect Donald Trump to impose import tariffs of 60% on goods from China. He emphasized that such tariffs would not solve the actual trade balance deficit of the US. Instead, they could further drive up import prices for products from China and other countries, thereby fueling inflation. China is ready to negotiate with the US on an equal footing to shape trade and economic relations to mutual benefit. Wang highlighted that China's total foreign trade volume, including imports and exports, reached approximately 36 trillion yuan between January and October, an increase of about 5% compared to the previous year. Despite this positive development, the threat of higher tariffs remains. These could reduce China's economic growth by 2.5 percentage points, as a previous analysis by UBS suggested. Additional challenges for the Chinese economy arise from slowing growth, uncertainties in the real estate sector, and rising local government debts. At the press conference, Wang and other officials emphasized China's efforts to promote trade and support the fight against climate change. Measures such as simplified customs and visa regulations are intended to promote international exchange. China now allows visa-free travel for citizens from 29 countries, which, combined with the increasing number of foreign visitors, gives hope for a recovery of the tourism industry.