Following U.S. President Donald Trump boosted the tariff on Chinese imports from 104% to 125%, the American investment bank Goldman Sachs made a decision and lowered its forecasts for China’s GDP growth in 2025 to 4% and 2026 to 3.5%, from 4.5% and 4.0% previously.
Goldman stated that the additional increase in tariff by 21% is too trivial to likely have any impact, but the entire 125% tariff rate could put a huge dent on China’s economy and labor market.
The investment bank also anticipated that China’s possible measures, such as intensifying policy easing or the increase of interest cut from 40 to 60 basis point, may not be sufficient to fully soften the negative effects of the tariffs.
Furthermore, the Global ratings agency Fitch also lowered China’s long-term foreign currency rating from “A+” to “A,” citing soaring government debt and continued weakening of public finances.
