Trump's 104% tariffs could cut down China’s GDP growth by 2.4 percentage points, warns Goldman Sachs

US President Donald Trump's latest round of sweeping tariffs—now fully in effect—are expected to deliver a significant blow to China's economy, with Goldman Sachs warning that the 104 per cent total tariff on Chinese goods could slash Beijing's growth by 2.4 percentage points.

China, which has set a 5 per cent growth target for the year, may fall short if the trade tensions intensify. Goldman Sachs is forecasting a lower 4.5 per cent growth, cautioning that risks to this outlook remain tilted to the downside.

The stiff tariffs took full effect just after midnight on Wednesday, following Trump's April 2 announcement that nearly all US trading partners would face a minimum 10 per cent import tax—with far steeper rates for countries running trade surpluses with the United States.

China feels the pressure
Goldman Sachs noted that the economic impact of the tariffs is not strictly linear, largely because China is often the dominant—or sole—supplier for a wide range of goods. For about a third of Chinese imports, the US relies on China for over 70 per cent of its supply, making it difficult to find quick alternatives.

While the full 104 per cent tariff—comprising earlier levies and a new 34 per cent hike last week—is expected to hit Chinese exports hard, Goldman suggests further increases may have diminishing marginal effects, given the existing dependency on Chinese goods.

Global tariffs expand
Beyond China, the latest tariff wave affects dozens of countries and territories, some of which now face unprecedented tax rates on goods entering the US Trump's new structure imposes:

50% on imports from smaller economies like Lesotho

47% on goods from Madagascar

46% on Vietnam

32% on Taiwan

25% on South Korea

24% on Japan

20% on the European Union

These new measures build on existing tariffs introduced earlier in the year, further escalating trade tensions across multiple regions.

Retaliation looms
The tariff hikes come amid renewed threats of a trade war. Beijing has already vowed to retaliate against the US, prompting Trump to warn of an additional 50 per cent levy on Chinese goods—on top of the existing charges.

While the long-term effects of these tariffs remain to be seen, early signs point to heightened economic strain on global supply chains and increased uncertainty for investors, businesses, and consumers worldwide.

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