Connect with us

China

EU to capture $70bn of the US-China trade war

Boris Sullivan

Published

on

A new study by UNCTAD looks at the repercussions of existing US and Chinese tariff hikes, as well as the effects of the increase scheduled for 1 March.

“Because of the size of their economies, the tariffs imposed by United States and China will inevitably have significant repercussions on international trade,”

Pamela Coke-Hamilton, head of UNCTAD’s international trade division

The study ( Key Statistics and Trends in Trade Policy 2018) underlines that bilateral tariffs would do little to help domestic firms in their respective markets.

Countries that are expected to benefit the most from US-China tensions are those which are more competitive and have the economic capacity to replace US and Chinese firms.

The study indicates that European Union exports are those likely to increase the most, capturing about $70 billion of US-China bilateral trade ($50 billion of Chinese exports to the United States, and $20 billion of US exports to China).

Japan, Mexico and Canada will each capture more than $20 billion.

East Asia suffers most from trade war

The high volume of Chinese exports affected by US tariffs is likely to hit East Asian value chains the hardest, with UNCTAD estimating that they could contract by about $160 billion.

The higher cost of US-China trade would prompt companies to shift away from current eastern Asian supply chains.

But the shift would not primarily benefit US companies, according to the report.

UNCTAD Trade war diversion chart
UNCTAD Trade war diversion chart shows EU as the big winner of US China trade war

“The effect of US-China tariffs would be mainly distortionary. US-China bilateral trade will decline and replaced by trade originating in other countries”

Pamela Coke-Hamilton, head of UNCTAD’s international trade division

82% captured by firms in other countries

The study estimates that of the $250 billion in Chinese exports subject to US tariffs, about 82% will be captured by firms in other countries, about 12% will be retained by Chinese firms, and only about 6% will be captured by US firms.

“Our analysis shows that while bilateral tariffs are not very effective in protecting domestic firms, they are very valid instruments to limit trade from the targeted country”, Ms. Coke-Hamilton said.

Similarly, of the approximately $85 billion in US exports subject to China’s tariffs, about 85% will be captured by firms in other countries, US firms will retain less than 10%, while Chinese firms will capture only about 5%.

The results are consistent across different sectors, from machinery to wood products, and furniture, communication equipment, chemicals to precision instruments.

Continue Reading
Advertisement Load WordPress Sites in as fast as 37ms!
Comments

China

Why Foreign Firms Struggle to Break Into China

In 2017, an analysis by Goldman Sachs found that while S&P 500 companies earned 30 percent of their revenues outside of the United States, China accounted for only 1 percent of their revenues.

Avatar

Published

on

For growth-starved Western entrepreneurs, the Chinese market is appealing. Think about it: Since 1995, China’s economy has grown by a factor of 18.5, from US$735 billion to US$13.6 trillion (excluding Hong Kong).

(more…)

Continue Reading

China

How China is using tourists to realise its geopolitical goals

Over the last two decades, the number of Chinese overseas travellers rose by over 25 times from 5.3 million in 1997 to 130 million in 2017, contributing an estimated US$250 billion to overseas economies

East Asia Forum

Published

on

Decades of astonishing economic growth have given China new tools for extending its influence abroad and achieving its political goals. Some of these tools are inducements, including Belt and Road Initiative projects and new development financial institutions.

(more…)

Continue Reading

Banking

How China’s role in global finance has changed radically

Within the space of just 15 years, China has gone from being the largest net lender to the world to now being a net borrower. The implications for the global economy, and China’s role within that economy, could be significant.

East Asia Forum

Published

on

‘If you owe the bank $1 million, you have a problem. But if you owe the bank $1 trillion, then the bank has a problem’. It’s an old gag, but it underscores an important point: the size of your borrowing or lending can have profound implications for your role in the world.

(more…)

Continue Reading

Most Read

Upcoming Events

Mon 21

34th International Conference on Dental and Oral Health

October 21 @ 9:00 am - October 22 @ 5:00 pm BMT
Nov 06

2nd World Congress on Pediatrics and Child care

November 6 @ 8:00 am - November 7 @ 7:00 pm BMT
Radisson Hotel Narita
Tomisato-shi
Nov 07

3rd World Congress On Gynecology, Obstetrics & Reproductive Health

November 7 @ 9:00 am - November 8 @ 4:00 pm BMT

Press Release

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 11,595 other subscribers

Trending