- Trump tariffs have caused a noticeable slowdown in China’s industrial output, with manufacturing activity dipping below critical levels.
- Copper shortages in China are worsening due to increased US demand and tariffs, risking a supply crisis.
- China has started offering tariff exemptions on certain US products to mitigate economic pressures, but the overall impact remains significant.
Trump Tariff Effects on China’s Economy
Trump tariff measures have begun having a tangible impact on the Chinese economy.
Even as Chinese authorities go on the propaganda spree claiming to be ever so confident, the hard fact is that China’s economic bounce back has been damped by the compounding effects of these tariffs that stand at an unbelievable 145% in a few instances.
China’s economy has already been reeling to recover from the coronavirus and beset with lagging domestic demand, and the additional burden now exerted by these tariffs only compounded the miseries.
Notwithstanding assurances from Chinese officials that they possess the means to shield jobs and contain the damage, the economic indicators point otherwise.
China’s factory production narrowed in April, the Purchasing Managers Index (PMI) falling below the signaling point of 50, indicating a slow down. The services industry also indicated weakening.
Economists blame this decline on the current trade war, with Trump tariff policies being at the center of it. While some smaller, labor intensive producers are holding up, large scale industrial producers that depend on foreign demand are struggling.
Trump’s tariffs have particularly affected China’s export led industries, depressing industrial production and impacting global supply chains.
Despite the government’s efforts to stimulate the economy via fiscal stimulus and policy adjustments, the overall growth projection for China has been lowered to only 3.5% for the year.
Copper Shortages and Global Market Impacts
Another industry seriously affected by Trump’s tariff policy is the copper market. With tariff issues escalating, US purchasers are scrambling to get their hands on copper, further worsening shortages in China.
The nation’s copper inventories are dwindling at a rapid pace, and specialists predict that China may exhaust its copper within a matter of months. This shortage is further worsened by retaliatory tariffs against US products and the possibility of the US imposing restrictions on copper scrap exports.
Copper’s role in such key industries as renewable energy and electric vehicles means it is even more essential to China’s economy, and the prevailing market tightness is sparking serious concern.
As part of its efforts to mitigate the pressure, China has been working quietly behind the scenes with businesses, informing them of a long list of US origin products that will be excluded from the tariffs.
Though the tactic is being pursued in the background, it is indicative that China is taking measures to correct itself following the pressure exerted by Trump’s trade policies.
Though such under the radar activities are underway, the general economic effect of the Trump tariffs is starting to emerge.
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