Analysts from Goldman Sachs have warned that the U.S. tariffs on Chinese imports could put up to 16 million jobs in China at risk, particularly in the manufacturing sector.

What Happened: The bank stated that persistently high U.S.-China tariffs and a significant drop in Chinese exports could put pressure on labor markets. The jobs under threat are primarily involved in the production of exports to the U.S., with nearly a quarter in the wholesale and retail sectors, reported the South China Morning Post.

"If high US-China tariffs were to persist and Chinese exports were to fall precipitously, labor markets would surely feel the pressure," stated the report

This year, the U.S. has levied tariffs of 145% on Chinese imports, pushing the effective tariff rate to around 156%. In retaliation, Beijing has imposed a 125% tariff on all U.S. goods, in addition to previous duties.

Goldman Sachs highlighted that communication equipment, apparel, and chemical products are more susceptible due to their significant share in US-bound exports from China. The bank also proposed that Chinese manufacturers could relocate production to third countries to circumvent high duties.

The report also noted that the U.S. removal of tariff exemptions for low-value package shipments is putting ’employment pressure’ on China's retail and wholesale sectors.

SEE ALSO: Intel Just Announced Q2 Guidance Below Estimates: Why The Stock Is Tumbling

Why It Matters: Earlier this month, Goldman Sachs warned about a sluggish economic recovery for China and deep labor market consequences. As per the bank, the tariffs could reduce Chinese real GDP by 2.6 percentage points — with a 2.2 percentage point impact hitting as soon as 2025.

The bank also predicted that the possibility of a U.S.-China decoupling could lead to a massive $2.5 trillion sell-off. In an extreme scenario, investors from both countries might be forced to divest their holdings of equities and debt instruments.

Meanwhile, S&P Global Ratings on Friday stated that Trump's tariff increases are expected to primarily affect China's coastal provinces, including Guangdong, Jiangsu, Shandong, and Zhejiang, along with Shanghai, a key port and financial hub.

That being said, a possible easing of trade tensions, China last week, reportedly began exempting some U.S. imports from high tariffs, including pharmaceutical imports and aerospace parts. Companies in China have been approached by officials to identify essential U.S. goods that are difficult to replace. Furthermore, the 24-member Politburo, led by President Xi Jinping, committed to stabilizing China's economy and employment, and called for support measures for those impacted by tariffs following a meeting last week.

The ADR of Alibaba Group Holding ( BABA ) Ltd climbed 0.8% to close at $120.28 on Friday, while that of PDD Holdings ( PDD ) Inc. rose 0.72% to close at $104.01. Meanwhile, the ADR of NetEase, Inc. ( NTES ) slid 0.05% to close at $105.86, as per BenzingaPro.

READ MORE: ‘Does Anybody Honestly Believe Manufacturing Is Coming Back To The US?’ One Person Asked. Says, ‘You’d Have To Pay Americans $40–$50/Hr’

Image via Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.