United States

Charted: The GDP Impact of Trump’s Tariffs on China

Published

1 month ago

February 6, 2025

Govind Bhutada

Graphics/Design:

Christina Kostandi

See this visualization first on the Voronoi app.

The Economic Impact of Trump’s Tariffs on China

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President Donald Trump has started his second term off with a flurry of policy actions and executive orders impacting the U.S. economy and trade with other nations.

Just two weeks in, the President announced a range of tariffs on trade partners like Canada, Mexico, and China. While those on Mexico and Canada have been put on hold, those on China have not and China has retaliated with their own tariffs on imports from the United States. These tariffs will cause economic damage to all parties involved—but to what extent?

This infographic shows the economic impact of Trump’s 10% additional tariffs on China, which went into effect on February 4, 2025. The data comes from the Peterson Institute for International Economics (PIIE).

How Will U.S. Tariffs on China Affect the Economy?

The table below shows projections on how the U.S.’ 10% tariff on imports from China would contract real GDP in both countries. It includes two potential scenarios: one without Chinese retaliation, and one considering a tit-for-tat tariff response from China.

Year	U.S. Real GDP Change	U.S. Real GDP Change (with retaliation)	China Real GDP Change	China Real GDP Change (with retaliation)
2024	0%	0%	0%	0%
2025	0.01%	-0.01%	-0.15%	-0.14%
2026	-0.02%	-0.06%	-0.16%	-0.19%
2027	-0.03%	-0.07%	-0.16%	-0.20%
2028	-0.03%	-0.06%	-0.15%	-0.19%
2029	-0.03%	-0.05%	-0.14%	-0.18%
2030	-0.03%	-0.05%	-0.13%	-0.17%
2031	-0.03%	-0.04%	-0.12%	-0.16%
2032	-0.03%	-0.04%	-0.12%	-0.15%
2033	-0.02%	-0.04%	-0.11%	-0.15%
2034	-0.02%	-0.03%	-0.11%	-0.14%
2035	-0.02%	-0.03%	-0.10%	-0.13%
2036	-0.02%	-0.03%	-0.10%	-0.13%
2037	-0.02%	-0.03%	-0.09%	-0.12%
2038	-0.02%	-0.03%	-0.09%	-0.12%
2039	-0.02%	-0.03%	-0.09%	-0.11%
2040	-0.02%	-0.03%	-0.09%	-0.11%

If both countries impose tariffs, U.S. real GDP is projected to contract by 0.07% by 2027. Over the same period, China faces a 0.16% drop in real GDP. This initial trough is projected to flatten through the 2030s.

If we consider the dollar impact of these tariffs in Trump’s second term as President, U.S. real GDP would be reduced by $55 billion over his four years in office. Meanwhile, China’s real GDP would reduce by $128 billion over the same period.

In other words, hundreds of billions of dollars worth of Chinese and U.S. products are at risk. These include electronics and textile exports from China to the U.S., along with agricultural and oil and gas exports going the other way. Additionally, a trade war could lead to potential job losses in the export economies of both countries.

According to PIIE, these tariffs are also likely to result in higher short-term inflation for both countries, although China would see an initial dip in inflation due to monetary tightening.

Tariff Tensions Continue with China Retaliation

China has already announced retaliatory tariffs on several U.S. goods, which will go into effect on February 10, 2025. These include a 15% tax on certain kinds of coal and liquefied natural gas, and a 10% tax on crude oil, agricultural machinery, and certain vehicles.

However, President Trump intends to impose tariffs on China until it stops exporting fentanyl, as China is one of the largest producers of fentanyl precursors globally.

The two respective Presidents are expected to have a call to discuss these matters. Regardless of how the situation plays out, it’s clear that more tariffs and a full trade war would hurt both economies.