Will fresh US tariffs on China be ‘too large to absorb, too conspicuous to dodge’?

As the final reports reviewing US-China trade relations arrive at the Oval Office by today’s deadline set by President Donald Trump, policymakers in Beijing may face restless nights as they await what could be a sudden escalation in the trade war between the two countries.

While it is still uncertain whether a deal is possible in the near term, analysts said that, this time, China might have less room to mitigate the impacts by relocating supply chains or compressing profit margins – like how it did during Trump’s first term.

Potential US tariffs on China could be “too large to absorb, too conspicuous to dodge”, according to a report from Barclays last week.

“Unlike in 2018, there is much less scope to divert trade and relocate supply chains,” Barclays said. “Moreover, tariffs will increasingly take their toll on profits, wiping out the narrow margins in those industries that are particularly exposed to US tariffs.”