The impact of US tariffs on China’s exports was initially masked by firms rushing out shipments of unaffected products in an attempt to beat any tariffs that came in later. That “front-running” seems to have run its course. The most recent US data show that shipments of all goods slowed sharply in November. China’s more timely data show that in January, for the first time since the trade war began, exports to the US significantly under-performed exports to the rest of the world. This pattern is likely to persist unless tariffs are rolled back. That said, the impact on overall output will be very small: we estimate that the current US tariffs will shave less than 0.2% off China’s GDP.
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