With the current domestic economic situation and external environment in mind, the need for expansionary domestic demand policies has become more apparent. A strong domestic demand in China not only helps to bring down the inflation rate, but also increases the chances of global and US inflation rebounding. On the other hand, a weak domestic demand in China would lead to a decrease in global and US inflation rates, making it more feasible for the US to impose higher tariffs on China.
Some US economists argue that imposing 60% tariffs on China would have a minimal impact on the US economy, citing three reasons: a significant depreciation of the Chinese yuan, government subsidies for enterprises, and a sharp reduction in export profits for Chinese exporters. However, these measures would, in fact, amount to indirect subsidies for the US, alleviating pressure on US inflation and further validating the correctness of Trump's policies.
In light of this, cautious consideration is required when implementing these measures to protect exports, as they would significantly reduce the intended effect of tariffs and perpetuate a vicious cycle.
Source: The 40-Person Finance Forum [1]