Tuesday, 26 March, 2019


China tariff hike could push downturn, trade shifts:The Asahi Shimbun

President Trump meets with Chinese Vice Premier Liu He at the White House on Jan. 31 President Trump meets with Chinese Vice Premier Liu He at the White House on Jan. 31
Conrad Doyle | 06 February, 2019, 18:10

Trump has vowed to increase tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent now if the two sides can not reach a deal by 12:01 a.m. (0501 GMT) on March 2.

With less than a month before a March 1 deadline for either a deal or an increase in US tariffs, hardliners inside and outside the administration fret Trump is being outplayed by Chinese President Xi Jinping and seduced by what they see as empty promises. This will be reflected in import and export patterns around the globe. Other countries set to benefit from the trade tensions include Australia, with 4.6 per cent export gains, Brazil (3.8) India (3.5), Philippines (3.2) and Vietnam (5), the study said.

Pamela Coke-Hamilton, who heads UNCTAD's worldwide trade division, said: "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".

The implications of such a development would be "massive", the UNCTAD Director, Division on International Trade in Goods and Services, and Commodities, continued, adding that its effects would first of all involve "an economic downturn. due to instability in commodities and financial markets".

Smaller and poorer countries would struggle to cope with such external shocks, she said. It also warned that the effects could be felt everywhere.

"Moreover, strong US growth in 2018 lifted imports from all countries, offsetting the impact of tariffs on the wider USA trade deficit", the IIF economists added.

"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", Pamela Coke-Hamilton, head of UNCTAD's worldwide trade division, said in a statement.

Also, UN research released yesterday argued that while Asian supply chains are likely to suffer from the tariffs, U.S. firms won't see much benefit.

The tech industry has been closely tracking the escalating tariffs imposed by the USA and China on one another.

The US tariffs are aimed at providing protection to US firms from Chinese competitors who can often produce goods more cheaply.

Next, Ms. Coke-Hamilton said, there would be "increased pressure on global growth, as companies will have to impose adjustment costs which will affect productivity investment and profitability".

"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 UNCTAD said. "China trade. Japan, Mexico and Canada will capture over $20 billion each".

But the effects of the trade war won't be negative for all regions.

In response, China imposed tit-for-tat tariffs on billions of dollars worth of American imports.

A major concern, the report authors said, is the impact the trade dispute will have on a still-fragile global economy. "One major concern is the risk that trade tensions could spiral into currency wars, making dollar-denominated debt more hard to service", the report added.

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