The lack of a trade agreement between the United States and China could lead to a significant drop in Chinese exports to the U.S., a new report suggests.
What Happened: The Observatory of Economic Complexity has projected that if the two countries fail to reach a trade agreement and the proposed higher tariffs on China are implemented, Chinese exports to the U.S. could reduce by $488 billion by 2027, reported CNBC.
Meanwhile, the U.S. trade with China is likely to decline by $101 billion.
According to the report, the most impacted sectors in this scenario would be computers, electrical equipment, toys, and apparel. The OEC’s forecast is based on the “Liberation Day scenario,” which involves a 34% tariff imposed on China in April, in addition to existing duties from the second Trump administration.
If this scenario unfolds, the report projects a sharp rise in Chinese exports to Southeast Asia, with more modest increases across Europe—especially in countries such as Italy, France, and the Netherlands. Vietnam and India could each see an additional $38 billion and $40 billion in Chinese imports over two years, while Russia might import up to $33.1 billion more from China.
Bills of Lading data shows Ikea leads U.S. imports from China, followed by Walmart WMT, Costco COST, Dole Fresh Fruit DOLE and Amazon AMZN. At the same time, Texas and California will be maximum impacted if the U.S.-China trade shrinks.
Former Commerce Secretary Carlos Gutierrez told CNBC, "Protectionism doesn't protect. It strips a nation of its vitality."
Why It Matters: These forecasts emerge as both countries rush to reach a truce before steep tariffs—exceeding 100% on Chinese goods—are reinstated on August 12.
The ongoing trade discussions between the U.S. and China have been marked by marathon meetings, such as the five-hour talk in Stockholm aimed at extending the trade truce. These negotiations are crucial as they aim to resolve economic disputes central to the trade war between the two nations.
The Stockholm meeting marked the third encounter this year between Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng. The discussions are expected to maintain the current tariff levels while both nations work towards a potential meeting between their leaders later in the year.
Furthermore, the U.S. has temporarily halted restrictions on technology exports to China to prevent disruptions to ongoing trade discussions and to bolster President Donald Trump's push for a meeting with Chinese President Xi Jinping later this year.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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