China braces for $108B export loss amid trade tensions
The ongoing trade war is expected to lead to Chinese export losses reaching $108 billion this year, according to analysts from Allianz Trade. They predict that some of these losses—around $26 billion—will be offset by an increase in exports to Europe.
Following the agreement between China and the USA, the trade war has been suspended. The deal established a 90-day period during which the USA reduced tariffs on Chinese goods from 103% to 39%, while China lowered tariffs on U.S. products from 140% to 24%.
Analysts from Allianz Trade note that these tariffs remain higher than they were before Trump's second term and predict that the current tariff levels will remain even after the 90-day period ends.
It is anticipated that the ongoing trade war will lead to Chinese export losses reaching $108 billion this year. However, China is simultaneously adopting strategies to mitigate these effects. We estimate that 75% of these losses ($82 billion) can be redirected through other Asian ports, and 25% ($26 billion) can be compensated by gaining market share in other regions, primarily Europe, the economists from Allianz Trade stated in the report.
They added that while $108 billion in losses is considerably less than earlier estimates, which projected $234 billion, it remains significant as it represents one-quarter of Chinese exports to the USA and 0.5% of China's GDP.
“When examining the sectors most likely to be affected, we can point to machinery and equipment, household appliances, textiles, and computers and telecommunications equipment,” predict analysts from Allianz.
