The 35% Tariff Enigma: Why an Economist Believes China Can Absorb the Blow

In a provocative assertion that challenges conventional wisdom on international trade, a leading economist has suggested that even a substantial 35% tariff imposed by the United States on Chinese goods could be well within China's capacity to absorb. This surprising outlook, presented in a recent CNBC segment from August 19, 2025, offers a nuanced perspective on the ongoing trade dynamics between the world's two largest economies, pushing against the widely held belief that high tariffs would cripple the Chinese market.

The economist's analysis delves beyond the immediate impact of tariffs, pointing towards several strategic and economic factors that could mitigate the damage.

One primary argument centers on China's massive domestic market. With a burgeoning middle class and increasing internal consumption, China has been steadily working to rebalance its economy away from an over-reliance on exports. A 35% tariff, while significant for export-oriented sectors, might accelerate this internal shift, forcing industries to innovate and cater more to domestic demand rather than international markets.

This internal pivot could, in the long run, foster greater economic resilience and self-sufficiency.

Furthermore, the diversification of China's export destinations plays a crucial role in this assessment. While the U.S. remains a key trading partner, China has aggressively pursued trade agreements and strengthened economic ties with countries across Asia, Africa, Latin America, and Europe.

Initiatives like the Belt and Road, coupled with a robust network of free trade agreements, have expanded China's global reach, lessening its singular dependence on the American market. Thus, a tariff hit from one major buyer, while impactful, may not be catastrophic if alternative markets can absorb a portion of the redirected trade flows.

The economist also highlighted China's manufacturing prowess and supply chain adaptability.

Decades of investment in infrastructure, technology, and a skilled workforce have created a highly integrated and efficient manufacturing ecosystem. While tariffs can disrupt specific industries, Chinese manufacturers have shown a remarkable ability to pivot, find alternative suppliers for inputs, and even reconfigure production to reduce costs or target new niches.

Government support, in the form of subsidies, tax breaks, or strategic guidance, could also play a critical role in cushioning the blow for affected companies, allowing them to ride out the initial turbulence.

This perspective isn't to say that a 35% tariff would be without pain for China; certainly, some industries and regions heavily reliant on U.S.

exports would face considerable challenges. However, the economist's view underscores a deeper understanding of China's long-term economic strategy and its capacity for structural adjustment. It suggests that China's leaders may view such tariffs not as an existential threat, but as a catalyst for accelerating necessary economic reforms and fostering greater self-reliance, ultimately strengthening its position on the global stage, even if the immediate path is bumpy.