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Stanchart: Extra Tariffs to Dampen CN Exports to US Drastically
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Becky Liu, Standard Chartered's Head of China Macro Strategy, commented that the U.S.’s announcement of additional tariffs targets not only China but also the global market, particularly with higher rates imposed on “China+1” countries. This will not only drastically downsize China’s direct exports to the U.S. but may also prompt a plunge in China’s indirect exports to the U.S. She expected the Chinese government to step up policy support in the future. To bolster fiscal spending, authorities are likely to continue front-loading bond issuance to boost domestic demand and offset the impact of weaker external demand. She also did not bar the odds of further increasing government bond issuance later this year, either through official budget deficits or special bonds, especially after most of the currently approved fiscal resources have been consumed. In her opinion, the Chinese government may take further actions in the future, beyond imposing tariffs on U.S. goods. These could include measures targeting service trade or even U.S. Treasury bonds, such as selling off long-term Treasuries. In the coming weeks, the USD/RMB exchange rate may rise to 7.3440 given tariffs and negative seasonal factors, she projected, maintaining a forecast of 7.35 for USD/RMB by the end of 2Q25, while expecting it to ebb back to around 7.20-7.25 in 2H25. AAStocks Financial News |
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