CNBC reports that according to research firm Capital Economics, Australia’s economy has been badly hit by escalating trade tensions with China.

China is by far Australia’s largest trading partner, accounting for 39.4% of goods exports and 17.6% of services exports between 2019 and 2020, the firm said.

But Beijing has for months been targeting a growing list of imported products from Down Under — putting tariffs on wine and barley, and suspending beef imports.

GDP in Australia could contract even more if Beijing continues to pile tariffs on more Australian imports, said its senior economist Marcel Thieliant in a note.

Goods and services that are already “in the firing line” are worth almost a quarter of Australia’s exports to China — forming 1.8% of its economic output, the research firm said.

“That figure could rise to around 2.8% of GDP if China targeted other products for which it isn’t hugely dependent on Australian imports,” Thieliant said.