A whopping 60 per cent tariff proposed by US president-elect Donald Trump on Chinese exports could be much lower, easing the impact on corporate earnings and stock markets in Hong Kong on the mainland, according to analysts.
Pictet Wealth Management predicted US tariffs on Chinese goods will rise to 20 per cent, while BNP Paribas said they would be capped at 25 per cent.
“One of the reasons that we do not take that 60 per cent at its face value is because we think that is going to have a pretty notable impact on the US economy, especially on the inflation front,” Dong Chen, chief Asia strategist and head of Asia research at Pictet in Hong Kong, said on Thursday.
Trump’s tariff target is probably leverage to negotiate with China but not the objective, he added. It is also important to consider potential retaliation from China and other countries that are expected to be hit with additional US tariffs, he said.
Meanwhile, BNP Paribas’ chief China economist Jacqueline Rong said she envisages a 10 per cent tariff on Chinese exports later this month after Trump enters the White House and another 15 per cent in phases in the second half of the year. There is “great uncertainty over the timing, pace and magnitude of tariff positions from the US side”, she said.
Chinese exporters could divert some shipments to mitigate the potential tariff increases, she added. The bank estimated China’s exports to the US are likely to fall by about 14 per cent year on year, knocking off about 2 percentage points from China’s overall export growth.