China’s exports to the US set to collapse

Unless they are rolled back, the latest US tariff hikes mean that China’s shipments to the US will more than halve over the coming years, even assuming the renminbi weakens to 8.00/$. This will reduce China’s GDP by somewhere between 1.0-1.5% depending on the extent of rerouting. That’s a larger hit than we had assumed but will probably be met with a further expansion in fiscal support.

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