Economy

Trump’s Tariffs Starting To Take A Toll On China’s Economy

Trump’s tariffs on billions of dollars-worth of imported Chinese goods are starting to take its toll on the Chinese economy and could usher in a bigger stimulus for the country.

According to a report in The Wall Street Journal (WSJ), citing a meeting of the Politburo, which includes members of China’s power players, the meeting was focused on the external challenges facing the Chinese economy  the world’s second-largest one. The Politburo didn’t mention the trade fight with the U.S., but made it clear in a statement that it threatens growth in China.

The Chinese economy “faces some new problems and new challenges,” according to the WSJ. “There are obvious changes in the external environment.”

The meeting came at the same time as data on Tuesday (July 31) that showed business activities in the country slowed in July, reflecting the first data point that includes the impact of U.S. tariffs. The paper noted that signs are growing of the slowing economic expansion, pointing to declining investments in factories and “anemic” household consumption, just as defaults among corporations are increasing.

The meeting on Tuesday (July 31) could pave the way for more easing economic measures to come. The statement noted that the WSJ supported pro-growth measures, such as spending on highways, railroad lines and infrastructure projects. This also includes keeping liquidity conditions at levels that are “reasonable and adequate.”

“Legitimate rights of foreign companies in China will be protected,” the statement said, referring to the tariffs.

The economy in China isn’t the only place where Trump’s tariffs are having an impact. Apple might have to raise prices on some of its products due to President Donald Trump’s latest proposal to charge a 10 percent tariff on Chinese imports. As a result of Trump’s trade war with China, U.S. consumers might be paying more for products — such as Apple Watch, AirPods earphones and HomePod speakers — if Apple has to compensate for higher duties on the Chinese-made products.

If the tech giant doesn’t raise prices, it could take a hit to profit margins. According to CNBC, analysts at Morgan Stanley noted “increasingly heated trade rhetoric between the U.S. and China” as one of the “greatest risks” to Apple’s share price in the months leading up to the new iPhone in September. Canalys, a market researcher, estimated that Apple shipped 3.5 million watches in Q2, with more than half sold in North America.

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