Economy

Fitch: US tariffs unlikely to have big impact

China's measured response and US indications of openness to talks suggest trade war avoidable, says Fitch Ratings

Gökhan Kurtaran  | 23.03.2018 - Update : 24.03.2018
Fitch: US tariffs unlikely to have big impact

London, City of

By Gokhan Kurtaran

LONDON

The U.S. government's proposal to impose tariffs on imports from China is unlikely to have a significant impact on the Chinese or global economy, said Fitch Ratings on Friday.

“The risk that piecemeal protectionist measures escalate into a more damaging trade war has risen in recent months, but China's measured response so far and U.S. indications of openness to negotiation suggest this scenario should still be avoided,” said a Fitch Ratings statement.

“$60 billion is equivalent to around 2.5 percent of China's total merchandise exports, or 0.5 percent of its GDP, but the impact of the tariffs on the Chinese economy would be much smaller. Some of these goods will still end up going to the U.S., given the lack of substitutes, while others could be diverted to different markets,” Fitch said.

Fitch said the bigger risk is that the U.S eventually imposes across-the-board tariffs on China, either because its bilateral trade deficit with China stays large or in the context of an escalating trade war between the two countries.

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