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Cutting China off from the U.S. would cost America hundreds of billions of dollars, report says

The U.S. economy could lose more than $1 trillion worth of production and long-term global competitiveness if the White House pursues a sharp separation with China, according to a report released Wednesday by the U.S. Chamber of Commerce and Rhodium Group. As U.S. President Joe Biden looks set to retain his predecessor’s tough stance on China, the authors of the report laid out estimates for the enormous costs of sweeping — rather than targeted — policies to protect U.S. national security from Beijing’s growing economic and technological clout.

These projected losses include:

  • By 2025, $190 billion a year in in U.S. output by expanding 25% tariffs to all trade with China. In the coming decade, full implementation of such tariffs would cause the U.S. to fall $1 trillion short of potential growth.
  • Up to $500 billion in one-time GDP losses if the U.S. sells half of its direct investment in China. American investors would also lose $25 billion a year in capital gains.
  • $15 billion to $30 billion a year in exported services trade if Chinese tourism and education spending falls to half of what it was prior to the coronavirus pandemic.
    Research for the 92-page report began in 2019, before the coronavirus pandemic hammered the global economy.

Tensions between the U.S. and China escalated in the last three years under former President Donald Trump. His administration sought to use tariffs, sanctions and greater scrutiny of cross-border financial flows to address longstanding complaints about China’s lack of intellectual property protections, forced technology transfers and significant role of the state in business operations.

Cutting China off from the U.S. would cost America hundreds of billions of dollars, report says, CNBC, Feb 18

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