China: Impact on GDP and inflation of US tariffs should be contained – Nomura

Analysts at Nomura estimate that the additional tariffs in place on USD50bn of Chinese goods result in a mere ~0.06pp reduction from China’s GDP growth over the short term.

Key Quotes

“The additional tariffs of 25% on USD200bn of Chinese goods effective 1 January 2019 would result in a ~0.26pp reduction from GDP growth, taking the overall impact of announced Section 301-related tariffs (covering USD250bn of Chinese imports) to -0.33pp.”

“If the US further targets the remainder of imports from China (~USD267bn) by imposing additional tariffs of 25%, it would lead to an additional 0.37pp reduction of GDP growth and take the overall impact to a 0.69pp reduction.”

“By contrast, we think the impact of China’s announced retaliatory tariffs on GDP growth (up to -0.02pp) and CPI inflation (+0.09pp) will be quite limited.”