China: Facing a New Wave of U.S. Tariffs and Trade Restrictions

A Variety of New Thorns in the U.S.-China Relationship
In a matter of weeks, the Trump Administration has announced several new trade measures and investigations directed at China. In addition to tariffs, these include "America First Trade Policy" which initiates several investigations into past agreements and Chinese policies, including the Phase 1 trade agreement, issues relating to unfair trade practices and intellectual property theft, and a review of S301 investigations that focus on trade circumvention through third countries. With the "America First" investigations expected to conclude by April 1, we expect the first 90 days of the Trump Administration to lead to a significant escalation in trade barriers between the two largest economies in the world.

Key Highlights
-- The deterioration in the U.S. China relationship seen since 2017 that has resulted in tariffs and technology restrictions is reflected in China's A rating.
-- The newly announced trade measures from the Trump Administration are likely to further increase headwinds to China's growth.
-- The ultimate impact remains uncertain, but China could see the imposition of further tariffs this spring following the completion of reviews initiated by the Trump Administration.

"While the full scope and implications of the recently announced U.S. tariffs remain uncertain, there also remains considerable uncertainty whether China could see the imposition of further tariffs once the Administration's trade policy reviews are completed (expected by April 1)." says Rohini Malkani, Senior Vice President, Global Sovereign Ratings. " A more confrontational stance on trade by US could generate further headwinds via tariffs and could slow the export growth that has buoyed China's economy in 2024."