As part of his re-election campaign, Donald Trump proposed a 60 per cent tariff on all Chinese goods. Whether he implements it or not, the US President-elect’s threat may be intended to bring Beijing to the negotiating table. But even if he succeeds in striking an agreement, it seems less clear that such a deal will lead to an increase in US exports to China. A study from the Peterson institute on the ‘Phase One’ deal between the US and China, agreed at the end of Trump’s last term, shows that China has bought none of the extra $200 billion in US exports it committed to at that time. With a far weaker outlook for Chinese consumers now than in his last term, it seems unlikely that any new deals designed to redress the trade imbalance between the two countries and increase US exports to China will be effective. Fathom’s US-China Exposure Index (CEI) tracks the share price performance of US-listed firms with revenue exposure to China, relative to their peers. The index has been weakening for the past year, indicative of the weak Chinese growth outlook, and declined further with the news of the election results, perhaps reflecting the expected rise in trade tensions. China-exposed firms won’t be the only ones feeling the impact of more tariffs, as multiple studies show that US consumers are the ones who have paid for the import tariffs that the US has implemented so far.
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