By Ovunc Kutlu
NEW YORK (AA) - China's economic growth would be impacted negatively if the U.S. would expand the scope of its tariffs and adopt more protectionist trade policies, Moody's said Thursday.
The U.S. President Donald Trump announced earlier he would impose $60 billion tariffs on imports from China, and proposed adding 25 percent additional tariffs on certain Chinese products.
"Moody's Investors Service expects the measures announced so far by the U.S. administration to have a limited effect on China's economy," the rating agency said in a statement.
However, "the negative impact on both Chinese economic growth and specific industries would be greater if the U.S. significantly expands tariffs and other significant and broad-ranging protectionist measures," Moody's said.
The agency listed some of the important Chinese exports to the American market such as cork and wood products, furniture, office machines, household appliances, electrical equipment, road vehicles, telecommunications equipment, electrical machinery, apparel and footwear, animal oils and fats.
"The U.S. receives between 15 percent and 35 percent of China's total exports by each of these sectors," Moody's said.
"In addition, telecommunications equipment, office machines, and electrical machinery comprised more than one third of total Chinese exports to the U.S. in 2017," it added.
Moody's warned that if the U.S. adopts a wider protectionist trade policy, this could pave the way to retaliation by other countries. And, that could negatively impact the credit profiles of Asian countries and manufacturers since the region strongly depends on trade-related industries and economies.
"Asia is exposed to unfavorable shifts in U.S. trade policy because of its volume of direct exports to the U.S., and also because of intermediate trade activity through supply chains, most notably through Greater China," Moody's said.
"Moreover, policy actions by the U.S. targeted at countries with which it has large bilateral trade deficits could negatively impact several other economies in the region, including Japan and Korea, as well as China," it added.