Alan Tan, chief economist at Affin Hwang Investment Bank Bhd, said that a blanket tariff policy on Chinese imports would cause China to retaliate and this would lead to a trade war.
He said Trump would not want a trade war with China.
“I believe Trump, being a businessman, will be very selective when imposing tariffs on products from China instead of doing it across the board.”
Trump’s predecessor, Barack Obama, had imposed tariffs on certain products, Tan said.
In 2009, Obama slapped tariffs on tyres imported from China in a move to protect the local tyre industry. It succeeded in creating jobs, but it led to American consumers paying more for tyres.
Tan said even a 15% tariff on all Chinese goods imported into the United States would drag down China’s GDP by 1.75%, and it would affect trade with other countries, including Malaysia.
“If China’s economy slows down, if its exports slow down, then Malaysia and the region would be affected because a lot of Malaysia’s intermediate goods are exported to China and reassembled to be exported to other countries.”
China is Malaysia’s largest trading partner. Last year, bilateral trade between the two countries hit RM241 billion.
Tan said he believed Trump would impose tariffs on Chinese products but these tariffs would be “watered down”.