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US tariffs and investment restrictions underscore tension

​The US announced that it will go ahead with its plan to impose 25% tariff on US$50 billion worth of Chinese imports, targeting sectors included in China’s “Made in China 2025” strategy. It also heralded investment restrictions targeting China.

The level of US tariffs is in line with our expectations, and, even with one-to-one retaliation from China, the short-term economic impact in China, the US and elsewhere is likely to be modest. But, in the midst of seemingly fruitful negotiations to increase Chinese imports from the US, the US measures underscore that economic tension and rivalry between the world’s two largest economies is on the rise.

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