China: New tariff on US imports becomes effective – Nomura

Analysts at Nomura point out that China announced it is imposing new tariffs on the importation of 128 products from the US, effective 2 April, in response to the US tariff hike on imported steel and aluminium in March, has come into play from yesterday.

Key Quotes

“We view China’s action more as a bargaining tactic rather than a legitimate threat of a trade war, but the uncertainty surrounding Sino-US trade relations has no doubt risen.”

“We continue to expect real GDP growth to slow to 6.7% y-o-y in Q1 2018 from 6.8% in Q4 2017.”

“We see some potential for near-term relief regarding the US Section 301 trade actions against China, especially once the USTR announces its list of potential tariffs, given: 1) there is expected to be a 60-day period of US public consultation that provides time for negotiation; 2) the Trump administration has demonstrated a willingness to take less drastic trade actions than initially proposed; and 3) US Treasury Secretary Mnuchin has highlighted possibility for a trade deal with China.”