The US President on Saturday announced sweeping measures against major trade partners, with goods from China facing an additional 10 percent tariff on top of the duties they already endure.
Trump said the measures aimed to punish countries for failing to halt flows of illegal migrants and drugs including fentanyl into the United States.
However, his action against Beijing was "not a big shock to China's economy", according to Zhiwei Zhang, president of Pinpoint Asset Management.
Given Beijing had already factored in higher tariffs this year, the move was "unlikely to change the market expectation on China's macro outlook", Zhang said.
"I don't think China needs to take action, such as exchange rate depreciation, to offset (the impact)," he added.
According to Bloomberg Economics, the 10 percent levy could knock out 40 percent of Beijing's goods exports to the US, affecting 0.9 percent of Chinese GDP.
That is a small fraction of China's vast economy, but it would put extra pressure on policymakers already grappling with slowing growth, a property sector crisis, and sluggish domestic consumption.
- 'First strike' -
Experts said Trump's focus seemed to be on trade relationships with Canada and Mexico more than China.
Under the new rules, Canadian and Mexican exports to the US will face 25 percent tariffs, with a partial exemption for Canadian energy resources.
But with targeted countries already vowing retaliation and Trump promising more duties in future, the move was "just the first strike in what could become a very destructive global trade war", said Paul Ashworth, chief North America economist at Capital Economics.
China has said it will take "corresponding countermeasures" against the tariffs, but has not elaborated what form they might take.
Gary Ng, a senior economist at Natixis, said Beijing "may react by imposing reciprocal tariffs on US imports, limiting exports of critical materials, and restricting market access to some American firms".
"At the same time, China may also see this as an opportunity to divide US allies and build closer relationships with other countries," he told AFP.
Zhang, of Pinpoint, said "the trade negotiation between China and the US will be a long process".
"I think this is just the beginning. We will have to wait and see if the US will raise tariffs on China further down the road," he said.
- Collective shrug -
On the streets of Beijing this weekend, the threat of looming tariffs was met with a collective shrug.
"China doesn't really care too much about the (trade) barriers, because we have already prepared for them," Xu Yiming, a private equity professional, told AFP outside a busy downtown shopping mall.
China's robust supply chains and cheap exports were "actually good for the American public, but MAGA supporters might need some trade barriers to help bring jobs back to the US", the 36-year-old added, using the acronym for Trump's grassroots movement.
"In the end, it's everyday people who bear the brunt of tariffs," he said.
Most people approached by AFP reporters said they were either unaware of the prospective levies or did not understand them well enough.
And though some declined to speak due to the political sensitivity of China-US ties, many seemed more interested in enjoying the ongoing Lunar New Year holiday.
"He should look after the US and leave China to us," a gruff middle-aged man said of Trump, before wandering off in the direction of a raucous temple fair.
Autos, electronics: What will Trump's tariffs impact?
Washington (AFP) Feb 2, 2025 -
US President Donald Trump's sweeping tariffs on Canada and Mexico are set to roil supply chains for products ranging from automobiles to avocados -- with industries girding for cost increases.
US imports from both countries covered nearly $900 billion in goods as of 2023, and supply lines between the three North American neighbors -- who share a trade agreement -- are deeply integrated. Fresh tariffs would pose complications for businesses with a footprint across one or more countries.
Analysts expect Trump's 25 percent across-the-board tariffs on Canada and Mexico would hit the automobile and electronics sectors hard.
While Canadian energy exports have a lower 10 percent rate, this still marks an uptick as Washington previously did not impose tariffs on Canadian oil imports.
Mexico and Canada also account for significant US agriculture imports, meaning the duties could add to prices of popular foods like avocados and tomatoes.
- Canada: energy, autos -
Nearly 80 percent of Canadian goods exports go to the United States, amounting to some $410 billion in value, according to Statistics Canada.
The levies will hit Canadian vehicle and energy industries hard, given that they represent over 40 percent of Canada's exports to the United States.
The energy exports involve mainly crude oil and bitumen, alongside natural gas.
The auto sector in Ontario -- the nation's most populous province -- faces particular challenges.
This is because "various parts cross the border multiple times before ending up in a finished product," said Robert Kavcic, at Bank of Montreal, in a research note.
The United States imports construction materials from Canada, too, meaning tariffs could drive up housing costs.
More than 70 percent of imports of two key materials homebuilders need -- softwood lumber and gypsum -- come from Canada and Mexico, said National Association of Home Builders chairman Carl Harris.
"Tariffs on lumber and other building materials increase the cost of construction and discourage new development," he said.
- Mexico: autos, electronics -
Mexico's exports to the United States represented 84 percent of the goods it sold to the world last year, according to its National Institute of Statistics.
This amounts to over $510 billion.
The auto industry spanning vehicles and parts, alongside the electronics and machines sector, will likely see the greatest impact.
They send around half of all their production to the United States, analysts from Capital Economics said.
The latest 25 percent tariffs would also affect sectors like food.
Mexico supplied 63 percent of US vegetable imports and nearly half of US fruit and nut imports in 2023, according to the US Department of Agriculture.
More than 80 percent of US avocados come from Mexico -- meaning higher import costs could push up prices of items like guacamole.
- Basis for tariffs -
Trump invoked emergency economic powers in imposing tariffs on Canada, Mexico and China, arguing they had failed to stem the flow of illegal immigrants and drugs into the United States.
Chinese goods faced an added 10 percent tariff under the latest announcement.
But analysts have said that US tariffs on Canadian and Mexican imports could be incompatible with the United States-Mexico-Canada Agreement (USMCA), a trade deal Trump inked during his first presidential term.
Some anticipated that Trump's posturing could be a way for Washington to gain an upper hand ahead of a 2026 deadline to review the USMCA.
- Potential impact -
Economists warned that heavy US tariffs -- and retaliatory measures -- could tip Canada and Mexico's economies into recession, while the United States would face risks of a shallow downturn too.
"The tariffs send a clear message, reinforcing Trump's America First stance while using trade as a geopolitical tool," EY chief economist Gregory Daco told AFP.
Markets will view this as heightened political uncertainty while investors brace for inflationary pressures and supply chain disruptions, he said.
Mexican President Claudia Sheinbaum has already announced that her country would impose retaliatory tariffs.
"Mexico and Canada could challenge the move under USMCA, while China may counter with targeted restrictions," Daco said.
A bigger concern, he said, is that the situation could escalate into a prolonged and broader conflict.
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