The US is by far the top destination for China’s exports, taking in more than $400bn worth of its goods each year.
With so much trade at risk, UBS has estimated that imposing a 60 percent tariff, on top of existing tariffs, would lower China’s gross domestic product (GDP) growth by 2.5 percentage points over the next 12 months.
Such a hit would come at an inopportune time for the world’s second-largest economy.
An ailing property sector, low consumer confidence and household spending well below the global average are all weighing on growth, while the country’s traditional investment-fuelled, export-led development model is struggling to pick up the slack.
Facing such headwinds, Chinese authorities are widely seen as unlikely to hit the government’s growth target of about 5 percent – a challenge that will only get harder if Chinese exporters lose US market access due to new tariffs.
The actual damage to the Chinese economy from the tariffs is likely to depend on companies’ ability to adapt.
Some companies might try to diversify their export structure or move their production to other countries and then export to the US from there.
Some Chinese firms have already taken such measures.
At Hebei Cangzhou New Century International Trade, a construction materials company in Hebei province that sends about 40 percent of its exports to the US, the management is considering teaming up with manufacturers in Indonesia.
At the same time, the Chinese government has been working on nurturing new markets for Chinese exporters.
In September, Beijing hosted 50 African nations for the Forum on China-Africa Cooperation, which aimed to boost African imports of Chinese products, particularly solar panels and electric vehicles.
China is Africa’s biggest trading partner, as well as the leading trade partner of most South American nations
Numerous manufactures are concerned that their success could all come crashing down if former US President Donald Trump is re-elected to the White House on November 5.
Trump who is running neck and neck with Vice President Kamala Harris in a race that is too close to call, has floated plans for tariffs of 60 percent or more on all goods heading to the US from China.
Economists have dubbed Trump’s plans “Tariff War 2.0”, after the Republican imposed tariffs as high as 25 percent on a range of Chinese goods during his first term in office, prompting Beijing to announce its own tariffs in turn.
Such a large increase in tariffs by the United States will definitely have a great impact on Chinese businesses.
It will result in Chinese products not being competitive, and at the very least Chinese manufacturers’ sales in the US will drop sharply.”
Since Trump’s announcement Chinese manufacturers has been working long hours a day to identify other export destinations that could offset a downturn in his US business.
So far, he has not been able to find a substitute for the world’s largest market.
“I am very busy trying to find solutions, but some days the situation feels terrible,” one business owner said. “Often, I don’t like to think about it.”Gary Ng, a senior economist with investment bank Natixis in Hong Kong, said that Chinese exporters have serious cause for concern if Trump re-enters the White House and follows through on his plans.
“With tariff rates at 60 percent, many Chinese manufacturers would no longer be competitive or able to turn a profit from their exports to the US market,” Ng told Al Jazeera.
“For the Chinese companies that are particularly exposed to the US market, this would be problematic, and they could face a lot of pressure.”