US-China decoupling: halving investment in China could cost American GDP up to US$500 billion, report says
- US Chamber of Commerce report says US GDP would see a one-time loss of as much as US$500 billion should companies reduce foreign direct investment in China by half
- Applying a 25 per cent tariff on all two-way trade would trim US GDP by US$190 billion annually by 2025, it said in the joint study with the Rhodium Group
American companies would lose hundreds of billions of US dollars if they slashed investment in China or the nations increased tariffs, the US Chamber of Commerce said in a report highlighting the cost of a full decoupling of the world’s largest economies.
Applying a 25 per cent tariff on all two-way trade would trim US GDP by US$190 billion annually by 2025, the group said in a joint study with Rhodium Group, a New York data and analytics firm.
The analysis highlights the costs of different policies as the Biden administration weighs the best strategy for facing the challenges posed by China.
The chamber said that the US should work with allies to confront China on its state-led economic model and national security concerns rather than acting unilaterally, and without undermining US productivity and innovation.
A “balanced and rational approach” to commercial relations with China is in the interests of both the US and the American business community, the chamber said.