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Trump tariffs could create a new challenge for Chinese policymakers: A growth rate below 5%

The imminent U.S. tariffs are likely to deal a significant blow to China's already-faltering economy, reinforcing calls for more forceful stimulus measures to bolster the country's growth.

U.S. President Donald Trump on Saturday followed through on a threat made after his presidential victory, imposing 10% tariffs on Chinese goods, starting Tuesday, over Beijing's alleged failure to prevent the flow fentanyl into the U.S.

The blanket 10% tariffs will be levied on top of the existing tariffs of up to 25% that Trump had imposed on Chinese goods during his first presidency.

The additional 10% tariffs would reduce China's real GDP growth by 50 basis points this year, economists at Goldman Sachs said in a report Monday.

The investment bank expects China's real GDP growth to slow to 4.5% this year while domestic price growth remains under pressure due to weak demand, with consumer inflation expected to rise just 0.4% in 2025. The consumer price inflation barely grew last year, rising 0.2% year on year. Higher U.S. tariffs could further strain domestic prices as external demand for Chinese goods weaken.

As Trump started his second term, he ordered his administration to investigate Beijing's compliance with a trade deal struck during his first presidency in 2020. The final result of the assessment will be delivered to Trump by April 1, potentially setting the stage for further tariff actions, economists said.

"Clearly the 10% tariff hike came in quickly and lower, but there remains a lot of uncertainty on the timing and scale of additional tariffs on China," Wang Tao, chief China economist at UBS Investment Bank told CNBC on Monday.

"We are not revising our 2025 baseline forecast of 4.0% GDP growth for China," she said, factoring in

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