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.
“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.
Thailand awarded Weibo 2019’s most popular destination
Chinese tourists are beginning to move from mainstream cities to emerging travel destinations; such as, the second tier cities, and the Tourism Authority of Thailand (TAT) hopes to provide Chinese tourists with quality information services
Could China’s financial repression be good for growth?
China’s financial reform and development over the past four decades could be described as strong in establishing financial institutions and growing financial assets, but weak in liberalising financial markets and improving corporate governance.
When China began economic reform in 1978, it had only one financial institution — the People’s Bank of China. As a centrally planned economy, the state arranged the transfer of funds and there was little demand for financial intermediation.(more…)
Is there a China model?
But what exactly is the China model and does it pose a threat to the Western model of liberal democracy and free markets?
Thailand Ecommerce Market: Shooting For Success
At present, the Thai ecommerce market is valued at USD 3.5 billion. According to a Google Temasek study, Thailand’s e-commerce...
Aspire Set to Become First SME Neobank in Southeast Asia with US$32.5 Million Raise
The recent financing has been led by Mass-Mutual Ventures Southeast Asia with participation from Silicon Valley’s Arc Labs and existing...
How is Thailand Bringing Technology to the Table?
In Asia, a country like Thailand has taken the initiative to implement agricultural biotechnology in its industry. The country has...