Donald Trump’s new tariffs on China could make it harder for Beijing to attract investment into its high tech sector, according to an expert. The White House slapped a new 10% tariff on Chinese imports on Tuesday, increasing fears of a major trade war between the two countries.
This follows the 10% levy imposed in early February, taking the total US tariffs to 20% since Trump re-entered the White House. The move comes at a difficult time for Beijing, with the government grappling with a number of economic woes. Low consumption, a property crisis and youth unemployment have dampened confidence in the overall economy despite strong exports over the past two years, giving China an almost trillion-dollar trade surplus.
Beijing wants to move away from its reliance on exports and is planning to pump billions of dollars into the economy to help spur consumer demand.
The government is also looking to attract investment into its high tech industries, in particular artificial intelligence (AI) and green energy.
Both sectors are seen as vital to government plans to grow and diversify the economy.
The success of DeepSeek sparked an AI-driven stock rally, with analysts noting renewed interest in China among foreign investors.
However, the new US tariffs threaten to deter investors from parting with their money, the head of China economics at Moody’s Analytics told the BBC.
“The chaos that tariffs leave in their wake is kryptonite for investment,” Harry Murphy Cruise said.
“Tariffs are set to deliver a one-two punch to China’s economy, landing blows to both exports and investment.”
He noted the a prolonged period of tariffs could cut Chinese exports to the US by between one quarter and a third.
China reacted with fury to the Trump’s new levies, placing retaliatory tariffs of between 10%-15% on a number of US agricultural goods.
The levies will come into effect rom March 10 and will affect chicken, beef, pork and soybeans.
Lin Jian, a foreign ministry spokesperson vowed that “China will fight to the bitter end of any trade war”.
