China is among a minority of countries that apply lower tariff rates on the US than vice versa, so it is not as obviously exposed to reciprocal tariffs as many others. But President Trump’s latest announcement underscores just how serious he is about trying to reduce the US trade deficit by levelling the playing field, not just with respect to tariff rates but also tax regimes, non-tariff barriers and exchange rate policies. This aligns with our base case that the ongoing review of US trade policy on China is unlikely to have a favourable outcome, paving the way for a substantial ramp up in tariffs.
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