However, Psigma investment manager Rory McPherson argued that the US would be “crazy” to implement any significant tariffs at all.
“The US $350bn trade deficit to China has been behind much of the argument for tariffs but they mean US consumers get cheap clothes and electrical products,” he said.
“The price of clothes would go up 46% and smartphones would go up 37% if these goods were not imported from China.
“On another level, 50% of the foods and feeds produced by the US goes to China, and this industry would be very damaged by trade barriers.”
He added: “Manufacturing makes up just 10% of the economy but much of the protectionist talk is around saving these industries because they have been shifted out of the US and are now served by cheap Chinese labour.
“I think it would be crazy for the government to hold the rest of the economy to ransom for such a small sector.”
He added: “Most importantly, China owns a lot of US treasury bonds (over $1trn) and if the country responded to US tariffs by selling these, the entire American economy would be destabilised. “This isn’t what Trump’s about,” he said.
“This tariff talk is posturing, in my view.”
