China GDP growth forecast slashed to 4.2% from 4.7% for 2025: Citi flags external risks over tariff hikes

China GDP growth forecast: Citi cut China's GDP growth forecast to 4.2 per cent from 4.7 per cent for 2025, citing rising external risks. Citi said in a note that high tariffs could drag China's growth further by at least 1.5 percentage points annually, with an extra impact of about 0.6 percentage points in 2025.

It also expects China's domestic policy to focus on expanding demand with the central bank's rate cuts. China refused to bow to what it called ‘blackmail’ from the US as a global trade war ignited by US President Donald Trump's sweeping tariffs showed few signs of abating, even as battered stock markets steadied.

Also Read: ‘China will never accept’: Beijing rejects Donald Trump’s threat to impose ‘ADDITIONAL tariffs on China of 50%’

Beijing's rebuke came after Trump threatened to hike tariffs on US imports from the world's top second economy to more than 100 per cent in response to China's decision to match the ‘reciprocal’ duties Trump announced last week.

US tariffs on China

Meanwhile, the US said on Tuesday that 104 per cent of duties on imports from China would take effect shortly after midnight, even as the Trump administration moved to start talks with other trading partners targeted by the US President's sweeping tariff plans after the April 2 announcements.

The administration has scheduled talks with South Korea and Japan, two close allies and major trading partners, and Italian Prime Minister Giorgia Meloni, who is due to visit next week. However, the White House team clarified that country-specific tariffs of up to 50 per cent would nevertheless take effect at 12:01 a.m. Eastern Time (0401 GMT), as planned.

Also Read: Trump tariffs: Top economic officials downplay US recession fears, say more than 50 countries seek negotiations

Trump's sweeping tariffs have raised fears of a recession and upended a decades-old global trading order. "Right now, we've received the instruction to prioritize our allies and our trading partners like Japan and Korea and others," White House economic adviser Kevin Hassett said on Fox News.

The White House said Trump instructed his trade team to create "tailor-made" deals for the nearly 70 countries that have reached out for talks. Trump's lead trade negotiator, Jamieson Greer, told Congress that the federal office is trying to work quickly but is not facing a particular deadline.

Europe eyes countermeasures

The European Commission, meanwhile, is mulling 25 per cent counter-tariffs on a range of US goods, including soybeans, nuts, and sausages, though other potential items, such as bourbon whiskey, were left off the list of tariffs. 

The 27-member bloc is struggling with tariffs on autos and metals already in place and faces a 20 per cent tariff on other products on Wednesday. Trump has also threatened to impose tariffs on EU alcoholic drinks. European pharma companies, also fearful of the tariff fallout, warned the president of the European Commission in a meeting that Trump's tariff hikes would expedite the industry's shift away from Europe and towards the US.

Also Read: Trump’s tariffs may knock out $5.67 bn of India’s exports; textiles, kitchenware, footwear may gain

With inputs from Bloomberg and Reuters