Key economic indicators, like retail sales and industrial output, posted significant declines in April – one month before President Trump hiked tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.
As the world’s two largest economies continue to retaliate with tit-for-tat tariffs this week (and as hopes for a deal dwindle), the data fueled concerns about the what the trade war means for the global economy.
Retail sales in China grew at an annualized rate of 7.2 percent, the slowest pace in 16 years and well below the 8.6 percent forecast by analysts. Industrial production, meanwhile, grew by 5.4 percent, far below March’s reading of 8.5 percent.
Already, China has enacted some measures to curb the effect of tariffs, including letting its currency depreciate compared to the U.S. dollar. Beijing also unveiled in March a plan to cut taxes by $298 billion in order to boost growth; however, Tuesday’s data suggest the benefits from that fiscal stimulus may be wearing off.
In a tweet on Tuesday, Trump said, “China will be pumping money into their system and probably reducing interest rates, as always, in order to make up for the business they are, and will be, losing.” If the U.S. Federal Reserve enacted similar measures, he argued, “it would be game over, we win!”