Moody's economist: U.S. to feel greater impact from retaliatory tariffs

A U.S. cargo ship docks at the Qingdao Port, Shandong province. (Photo by Yu Shaoyue/For China Daily)

The United States will likely experience more pain from retaliatory tariffs than China, said Steve Cochrane, chief Asia-Pacific economist at Moody's Analytics during an interview with CCTV News on Monday.

He explained that while the U.S. is China's second-largest source of imports, it only accounts for about 7 percent of total imports coming into China.

China's import sources are very broadly distributed around the world. There isn't a high concentration that comes from every single country, so imports coming in from the U.S. can easily be substituted by other countries, he added.

Taking the trade war on soybeans back in 2018 for example, he stated that China shifted soybean imports from the U.S. to Brazil, with Brazil still an important supplier of soybeans to China.

Cochrane thinks China will be able to find other sources of imports for those goods. This situation will hurt the agricultural economy, which is in the mid-section of the U.S. economy geographically, and it could be very painful for the U.S..

If indeed nothing changes and President Trump makes no pullback on tariffs, the consumer side of the economy will slow down, prices will increase, and consumers will be hesitant to spend given the uncertainty.

More importantly, investment spending will slow down or come to a halt until investors and individual firms have a clear understanding of where things are in terms of the tariffs, he said.

Cochrane believes that people could see a recession happening very quickly in the U.S., which could last a year or so.