Industry News

The Winner Of A US-China Trade War Isn’t Going To Be The Us Or China

The US-China trade war rages on. Barring progress in negotiations, 10% tariffs that the US imposed on $200 billion in Chinese goods will increase to 25% as of Jan. 1, 2019.

While it seems possible, and perhaps likely, that increased trade restrictions will hurt the average person in the US and China, that’s not the case for every nation. If China isn’t exporting as much stuff to the US, there is an opportunity for other countries to fill the void.

There’s a Chinese proverb for this scenario: When the snipe and clam quarrel, it is the fisherman who profits. In this case, the fisherman may well be Vietnam or the Philippines.

In a recent analysis, World Bank economist Massimiliano Calì found that if all planned tariffs go into effect, US imports from China will fall by nearly $70 billion. This would amount to 14% of all US imports from China. Many of those imports are electronics, machinery, furniture, and vehicles.

In his analysis, which was published by the The Center for Economic and Policy Research, Calì explores which countries might be able to replace those imports. He did this by looking into the Chinese products subject to higher tariffs that other countries in East Asia also produce at a large scale (the analysis focuses on East Asia because countries in this region have the most similar export profile to China). For example, Calì estimates that the value of exported chairs from China to the US will fall by over $400 million. Since Vietnam already exports hundreds of millions of dollars in upholstered chairs to the US, the country is well placed to step in.

After finding the products that each country might be able to replace, Calì then summed the total decrease in Chinese exports to the US in these products, and then divided it by that country’s GDP. The biggest possible winner by this analysis would be Vietnam. He found that if Vietnam was able to replace all of the exports in the products they already produce, it would be equal to 4.4% of the country’s GDP. Other countries that could be winners are the Philippines (4.1%) and Cambodia (3.6%).

Calì points out that this is the absolute most a country might benefit from replacement, so the likely gains are much smaller. Still, he think this is good representation of the potential gains for each of these countries.

The analysis also points out that other East Asian countries risk being collateral damage in the trade war. Taiwan and Malaysia both export a large amount of goods to China that are used in manufacturing the products that are exported in the US. Calì estimates that the trade war could decrease Taiwan’s GDP by over 0.2%. When the snipe and clam quarrel, sometimes the fisherman also gets caught in the crossfire.

(Quartz)

Show More

admin

just an admin

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close