A report from Macquarie Group Ltd suggests that if the trade war between the U.S. and China escalates during President-elect Donald Trump's second term, it could have a negative impact on China's GDP growth.

The economists at Macquarie predict that if Trump's proposed tariff increase on Chinese goods to 60% goes into effect, it could result in a significant decline in China's exports within a year. This decline in exports, coupled with the anticipated impact on business confidence and capital expenditures, could further worsen the economic slowdown.

To counteract these effects, Beijing may need to implement measures to stimulate domestic demand.