India Among Countries to Benefit From US-China Trade War: United Nation

Roman Schwartz
February 6, 2019

China's economy has slowed sharply and the impact has been felt in the USA as well, and most forecasters expect U.S. growth to slow this year.

The president also renewed his often-repeated falsehood that China was paying the USA import duties on its exports.

Since even before becoming the US President, Trump has maintained a tough stance against China and blamed the country for going on a 'commercial crime spree.' Beijing has been blamed for stealing foreign intellectual property and for forcing American companies to share technologies.

A similar scenario would apply to the $110 billion in USA exports hit by Chinese tariffs, the report said, estimating that 85 percent would go to companies in other countries, 10 percent would remain in the US and only about five percent would go to Chinese firms.

The UNCTAD study pointed to the soybean market, where the tit-for-tat tariffs have resulted in "trade distortionary effects" that have benefitted Brazil especially, since the country has suddenly become the main soybean supplier to China. Japan and Canada, meanwhile, will see exports increase by more than $20 billion each.

"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. But because the magnitude and duration of tariffs is unclear, Brazilian producers have been reluctant to make investment decisions that may turn out to be unprofitable if the tariffs are revoked.

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They also found that 10 percent tariffs on a further $200 billion in imports that took effect in late September had less of an impact and had led to a well-documented pre-tariff surge in imports as companies sought to get ahead of the tariffs. An economic downturn often accompanies disturbances in commodity prices, financial markets and currencies, all which will have important repercussions for developing countries.

Another worry is that more countries may join the fray and that protectionist policies could escalate to a global level.

The trade war between the United States and China has caused major disruptions for global businesses - but it may also bring benefits for some.

"One major concern is the risk that trade tensions could spiral into currency wars, making dollar-denominated debt more hard to service", the report adds. Tariff increases penalize not only the assembler of a product, but also suppliers along the chain.

U.S. Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer plan to hold trade talks in Beijing early next week, Dow Jones reported on Tuesday, citing an unidentified senior administration official.

The United States levied additional duties of between 10 percent and 25 percent on $250 billion of Chinese goods past year as punishment for what it called unfair trade practices, and the 10 percent tariffs are set to climb to 25 percent unless there is significant headway on a trade deal by March 1. March 1, 2019 is the deadline for implementing the measures.

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