The recent imposition of 10% tariffs on Chinese goods by the U.S. is poised to have a significant negative impact on China's already struggling economy. Following President Trump's announcement, economists predict that these tariffs will reduce China's real GDP growth by 50 basis points this year, bringing it down to 4.5%. This comes on top of existing tariffs of up to 25% from Trump's first presidency. The economic landscape in China is further complicated by low domestic demand and minimal inflation, with consumer price growth expected to remain stagnant. The Chinese yuan has already shown signs of weakness against the dollar, and experts suggest that the People's Bank of China will likely focus on stimulus measures to bolster domestic demand rather than allowing a drastic currency devaluation. As the situation evolves, the central bank's strategy will be crucial in managing the economic fallout from these tariffs, with expectations of increased fiscal spending to counteract deflationary pressures and stimulate consumer spending.
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