NEW YORK — East Asian supply chains will sustain the most damage from the U.S.-China trade war, while the European Union stands to grab the largest chunk of commerce hit by tariffs, a United Nations trade agency said on Monday.<\/p>\n\n\n\n
“The results indicate that while both the North American and East Asian value chains will be negatively affected, East Asian value chains will shrink considerably more,” according to a new report by the U.N. Conference on Trade and Development, or Unctad. “Trade would be reduced by about $160 billion for East Asian regional chains.”<\/p>\n\n\n\n
The report adds to worries over the tariff battle’s impact on East Asian growth. More than 70% of corporate leaders in China, Japan and South Korea said in a recent survey<\/a> that the trade war will hurt their business.<\/p>\n\n\n\n Of the $250 billion in Chinese exports subject to American tariffs, an estimated 82% will be captured by companies in other countries, about 12% will stay in China and only about 6% will be taken by U.S. businesses, the report said.<\/p>\n\n\n\n Similarly, of the roughly $110 billion in U.S. exports subject to Chinese tariffs, about 85% will be taken by companies in other countries. American businesses will hold on to less than 10%, while Chinese rivals will capture only about 5%.<\/p>\n\n\n\n The report also casts doubt on the effectiveness of tariffs as a means of protecting industries from overseas competition.<\/p>\n\n\n\n “Our analysis shows that while bilateral tariffs are not very effective in protecting domestic companies, they are very valid instruments to limit trade from the targeted country,” said Pamela Coke-Hamilton, director of Unctad’s international trade division. “The effect of U.S.-China tariffs would be mainly distortionary. U.S.-China bilateral trade will decline and be replaced by trade originating in other countries.”<\/p>\n\n\n\n Countries that are more competitive and have the economic capacity to replace U.S. and Chinese companies are expected to benefit the most, the agency said. EU exports are likely to enjoy the biggest increase, capturing about $70 billion of the affected U.S.-China bilateral trade — including $50 billion of Chinese exports to the U.S. and $20 billion of American exports to China. Japan, Mexico and Canada will each capture more than $20 billion.<\/p>\n\n\n\n Strong effects relative to the size of their exports are also expected for Australia, Brazil, India, the Philippines, Pakistan and Vietnam. For example, Vietnam is expected to enjoy a 5% increase in exports, India 3.5% and the Philippines 3.2%.<\/p>\n\n\n\n But Unctad warned that negative global effects are likely to dominate. The interconnected global economy means “the tit for tat moves of the trade giants are likely to have a domino effect” — as tariff increases penalize not only the assembler of a product, but also suppliers along the chain.<\/p>\n\n\n\n The study highlights other concerns — including negative spillovers to commodities and financial markets and the increased risk of a global economic downturn. Trade frictions impose adjustment costs to international companies, which would reflect upon investment decisions, profitability and productivity — and the increase in uncertainty about commitments to trade rules adds to the risk of investing abroad.<\/p>\n\n\n\n These factors ultimately will harm the growth prospects of many countries, especially small and low-income developing countries, as they are generally less resilient to unfavorable global conditions.<\/p>\n\n\n\n “Another worry is that more countries may join the fray and that protectionist policies could escalate to a global level,” Unctad said.<\/p>\n","protected":false},"excerpt":{"rendered":" NEW YORK — East Asian supply chains will sustain the most damage from the U.S.-China trade war, while the European Union stands to grab the largest chunk of commerce hit by tariffs, a United Nations trade agency said on Monday. “The results indicate that while both the North American and East Asian value chains will be negatively affected, East Asian… Read more »<\/a><\/p>\n","protected":false},"author":92,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2981","post","type-post","status-publish","format-standard","hentry","category-analysis"],"_links":{"self":[{"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/posts\/2981","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/comments?post=2981"}],"version-history":[{"count":1,"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/posts\/2981\/revisions"}],"predecessor-version":[{"id":2982,"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/posts\/2981\/revisions\/2982"}],"wp:attachment":[{"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/media?parent=2981"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/categories?post=2981"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/baileyonlineclassroom.com\/eastasiaandoceaniablog\/wp-json\/wp\/v2\/tags?post=2981"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}