US: What if tariffs on all China imports were 25%? – Standard Chartered

Sonia Meskin, US economist at Standard Chartered, suggests that if all US imports from China (USD 535bn) were subjected to 25% tariffs, then they estimate no more than a 0.02-0.4% impact on the US GDP and 0.05-0.20% on core CPI y/y.

Key Quotes

“Even though tariffs constitute a one-off supply shock and likely entail deadweight loss to the economy, we believe the effects of a broad 25% tariff are likely to be relatively small for the US, unless there is a sustained negative impact on business and consumer confidence.”

“The sum of exports and imports with China (USD 685bn) is just over 3% of nominal US GDP. If 25% tariffs were imposed on all of China’s exports and imports, the amount would still be less than 1% of US GDP against the backdrop of solid economic growth, stable inflation and a robust labour market. But even this loss would be an extreme and unlikely scenario.”

“In practice, the substitution effect, some Chinese yuan (CNY) devaluation and some pass through of the cost to China’s producers are likely. We estimate no more than a 0.02-0.4% impact on US GDP and 0.05%-0.20% on core CPI y/y. The impact could be higher should business and consumer confidence be adversely affected and depress real activity.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News

Editors’ Picks

EUR/USD chops around amid end-of-month flows, ahead of Trump

EUR/USD is battling 1.11, close to the two-month highs amid choppy trading. Hopes for a fiscal boost in Europe and mixed satisfactory data have supported the currency pair. , Sino-American tensions are rising and investors await President Trump's China announcement.


GBP/USD advances amid US dollar weakness, shrugging off concerns

GBP/USD is trading above 1.23, edging higher amid US dollar weakness and Britain's gradual reopening. Intensifying Sino-American tensions and the Brexit impasse are ignored. 


Cryptocurrencies: $348M in matured derivatives boost the market

Futures and options contracts' expiration brings a wave of volatility to the crypto market. Ethereum takes advantage and attacks resistances in the market dominance chart, Bitcoin goes back. Ripple disappoints despite regaining the third place in market capitalization.

Read more

Canada's economy falls by 8.2% annualized in Q1, better than expected, USD/CAD shakes

The Canadian economy squeezed by an annualized rate of 8.2% in the first quarter of 2020, better than -10% expected. Quarterly, Gross Domestic Product (GDP) squeezed by 2.1%. Most of the downfall occurred in March, with a drop of 7.2%, better than 8.5% projected. 

Read more

WTI drops 4% and eyes $32 mark amid risk-off, weakening demand

The selling pressure around WTI (July futures on Nymex) accelerates following the break below the 33 level, as bears now target the 32 support zone heading into the key US macro data and US President Donald Trump’s response to the Hong Kong issue.

Oil News