The United States (US) economy is predicted to suffer more than $ 1 trillion in losses if it cuts ties with China. This is based on reports from the US Chamber of Commerce and the Rhodium Group.
Quoting from CNBC, Friday (19/2/2021) the report reminded that US President Joe Biden is likely to maintain a tough US stance on China. In the report also, presented the estimated cost of losses, if the US really broke ties with China.
The projected losses include, by 2025, if the US expands the trade tax rate with China by 25%, the US will incur a loss of $ 190 billion. In the next decade or so, full adoption of such tariffs will cost the $1 trillion growth potential.
Furthermore, a one-fold GDP loss of up to $ 500 billion if the US sells half of its direct investment in China. US investors will also lose $ 25 billion a year in capital gains.
Tourism and Exports Revenue Will Decrease
Breaking ties with China will also cause a decrease in income in the tourism and export sectors. Losses were $ 15 billion to $ 30 billion per year.
Tensions between the US and China have escalated in the past three years under former US President Donald Trump. His government continues to seek extreme policies such as increasing trade tariffs, sanctions and surveillance on Chinese businesses.
In addition to causing losses, the US is also predicted to lose global competitiveness. It is feared that other countries will reconsider their relationship with the US. It added that this move would increase the losses for the US.
The report also looks specifically at the impact of White House policies on the aviation, semiconductor, chemical and medical device industries. A complete disconnect from US business from the Chinese market is likely to have even greater consequences for US global leadership in the long term.
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