Goldman Sachs has revised down its economic growth forecasts for China, citing the significant negative impact of newly imposed U.S. tariffs on Chinese goods. The U.S. investment bank now expects China's real GDP to grow by 4.0% in 2025 and 3.5% in 2026, down from its previous projections of 4.5% and 4.0%, respectively.
The downward revision follows President Donald Trump's decision to sharply increase tariffs on Chinese imports to 125%, up from the already elevated 104% rate that took effect just a day earlier. Goldman Sachs analysts believe this substantial tariff hike will have a material impact on China’s export sector, economic momentum, and labor market conditions.
Although Goldman anticipates that Beijing will respond with expanded policy easing, including 60 basis points of interest rate cuts (up from 40bp previously forecast), it warns that these measures are unlikely to fully offset the economic damage. The bank estimates that 10 to 20 million Chinese workers could be directly affected due to their roles in export-oriented industries, particularly those tied to U.S. trade.
While Goldman acknowledges that future tariff increases may have a diminishing marginal impact—since current levels are already high enough to disrupt trade flows—it still sees the present tariff environment as a substantial drag on China’s near-term growth prospects.
In a related move, Fitch Ratings downgraded China’s long-term foreign currency credit rating by one notch to “A” from “A+” on April 3, marking another sign of growing concerns about the country's economic resilience amid rising external pressures.