J.P. Morgan raises China growth forecast following tariff de-escalation
J.P. Morgan has adjusted its 2025 growth forecast for China to 4.8% after the U.S. and China agreed to a temporary reduction in trade tariffs.
The U.S. and China have reached a temporary agreement to reduce tariffs on mutual imports, signaling a cooling of trade tensions between the world's two largest economies. The 90-day pause includes both a reduction in tariff rates and the suspension of non-tariff retaliatory measures, such as export controls on rare earth minerals.
Haibin Zhu, chief China economist at J.P. Morgan, noted that the scale of the tariff reduction is significant. The transition from punitive tariff structures to a more normalized 10% universal rate provides a more stable outlook for Chinese manufacturing and exports. Consequently, the firm has revised its full-year growth projection for China upward to 4.8%, up from the previous low of 4.1% calculated during the peak of trade volatility.
While this agreement provides immediate relief, the outlook remains cautious. J.P. Morgan analysts highlight that negotiations are ongoing and a resurgence of trade barriers cannot be ruled out if a long-term resolution is not secured within the 90-day window.