Chinese investors are increasingly anxious about the potential re-election of former U.S. President Donald Trump, amidst a struggling economy and plummeting stocks, reports Goldman Sachs.
What Happened: Goldman Sachs identified Trump’s potential re-election as a significant concern among their clients in Beijing and Shanghai, reported Bloomberg on Sunday.
The apprehension stems from Trump’s possible plans to levy significant tariffs on Chinese imports if he secures a second term. The former president has previously expressed support for revoking China’s “most favored nation” status for U.S. trade, potentially resulting in U.S. tariffs on Chinese goods exceeding 40%. Additionally, Trump indicated a possible flat 60% tariff on all Chinese imports in a Feb. 4 Fox News interview.
However, David Firestein, CEO of the George H. W. Bush Foundation for U.S.-China Relations, opines that the election results might not significantly alter U.S.-China relations. "Whoever wins the 2024 presidential election, whether that's Biden or Trump, I don't think there'll be a difference in the way the U.S. approaches China – whether it's U.S. investment, technology transfer or trade," the former American diplomat said.
Chinese investors are currently grappling with economic challenges, with the CSI 300 Index and Shanghai Composite Index registering significant losses recently. Furthermore, their outlook for China’s economic prospects for 2024 is pessimistic, with half of the investors equating it to the challenging lockdown period of 2022.
Why It Matters: Trump’s potential return to the White House has been a topic of intense speculation. Trump himself has attributed the stock market surge to investors’ confidence in his possible return.
His victory in the Iowa Caucus sparked fears of a downturn in China's stock markets. This suggests that Beijing is apprehensive about his potential return.
Meanwhile, Japan has been advising Trump against forming any agreements with China that could disrupt regional peace. Trump has also hinted at imposing a tariff exceeding 60% on all Chinese imports if he returns to the presidency.
Read Next: Trump Dominates Biden In Swing States: 2 Big Issues Could Alter Picks For 2024 Presidential Election
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