Trump’s Tariff Move Pushes China to Ramp Up Budget Spendings

Trump's tariff reforms continue to threaten the overall macro sentiment globally. Countries have been revising their trade books and engaging in bilateral trade talks to counter the impact of US tariffs, which are expected to put pressure on the global supply chain.

For China, the impact could be worse as its tit-for-tat retaliatory play has prompted Trump to impose a staggering 245% tariff on Chinese imports. This has pushed Beijing to ramp up government spending at its fastest pace for any first quarter since 2022.

China's total spending across its general public budget and government fund account reached 9.26 trillion yuan ($1.3 trillion), in the first quarter (Jan-March). As per Bloomberg's calculation based on data from the Ministry of Finance, this amount marks a surge of 5.6% from the corresponding period of the previous year.

This comes at a time when multiple major banks, including UBS and Citigroup, have downgraded China's growth estimates this year to 4% or lower. Earlier this month, even Goldman Sachs lowered the country GDP growth forecast to 4% in 2025 and 3.5% in 2026, citing the impact of tariffs. Despite the government's supportive measures to boost the economy, analysts believe that Trump's tariff policies will heavily weigh down the growth outlook.

“Fiscal policy will turn from a growth drag last year to a major driver this year, although it should be still insufficient to fully offset the impact of external shocks,” Goldman Sachs Group Inc. economist Lisheng Wang reportedly said in a Saturday note.

Will US remain immune?

Perhaps no. Atleast that's what analysts have pointed out, with some even raising concerns over a prospective recession in the country.

"Just a couple of months ago, the US economy was performing well, the outlook was positive, the stock market was at an all-time high, and there was much talk about American exceptionalism. Now, if Trump’s tariffs are put into effect, the US economy is likely to experience a recession sooner than otherwise would have been the case, higher inflation, and extensive dislocation," American investor Howard Marks, Co-founder of Oaktree Capital Management, said in a memo.

There is also a larger sentiment that the US might bear the brunt of tariff play. According to Willem Sels, CIO, HSBC Global Private Banking and Wealth, the impact of tariffs is estimated to be higher in the US, than in the rest of the world.