US tariffs on China are economically hurting both, the United Nations Conference on Trade and Development (UNCTAD) cautioned in a new study report released yesterday that shows the ongoing US-China trade war has resulted in a sharp decline in bilateral trade, higher prices for consumers and increased imports from countries not directly involved in the trade war.
By analysing recently released trade statistics, the study finds that US consumers are bearing the heaviest brunt of the US tariffs on China, as their associated costs have largely been passed down to them and importing firms in the form of higher prices, according to an UNCTAD press release.US tariffs on China are economically hurting both, the United Nations Conference on Trade and Development cautioned in a new study report released yesterday that shows the ongoing US-China trade war has resulted in a sharp decline in bilateral trade, higher prices for consumers and increased imports from countries not directly involved in the trade war.#
However, the study also finds that Chinese firms have recently started absorbing part of the costs of the tariffs by reducing the prices of their exports.
“The results of the study serve as a global warning. A lose-lose trade war is not only harming the main contenders, it also compromises the stability of the global economy and future growth,” said UNCTAD’s director of international trade and commodities, Pamela Coke Hamilton.
US tariffs caused a 25 per cent export loss, inflicting a $35-billion blow to Chinese exports in the US market for tariffed goods in the first half of 2019, the analysis found.
This figure also shows the competitiveness of Chinese firms, which, despite the substantial tariffs, maintained 75 per cent of their exports to the United States.
The office machinery and communication equipment sectors were hit the hardest, suffering a $15-billion reduction of US imports from China as trade in tariffed goods in those sectors fell by an average of 55 per cent.
Trade of tariffed goods in sectors like chemicals, furniture and electrical machinery also dropped substantially.
Though the study does not examine the impact of the most recent phase of the trade war, it warns that the escalation in summer of 2019 is likely to have added to the existing losses.
US tariffs on China have made other players more competitive in the US market and led to a trade diversion effect as well. Of the $35 billion Chinese export losses in the US market, about $21 billion (or 63 per cent) was diverted to other countries, while the remainder of $14 billion was either lost or captured by US producers.
According to the report, US tariffs on China resulted in Taiwan gaining $4.2 billion in additional exports to the US in the first half of 2019 by selling more office machinery and communication equipment.
Mexico increased its exports to the US by $3.5 billion, mostly in the agri-food, transport equipment and electrical machinery sectors.
The European Union gained about $2.7 billion due to increased exports, largely in the machineries sectors. Vietnam’s exports to the United States swelled by $2.6 billion, driven by trade in communication equipment and furniture.
Trade diversion benefits to Korea, Canada and India were smaller but still substantial, ranging from $0.9 billion to $1.5 billion. The remainder of the benefits were largely to the advantage of other Southeast Asian countries. Trade diversion effects favouring African countries were minimal.
Fibre2Fashion News Desk (DS)
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