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Sarah Zheng

As the opening shots are fired in the China-US trade skirmish, the rest of the world is bracing itself for the fallout from the conflict between the world’s two largest economies.
Beijing on Wednesday announced extra tariffs on US$50 billion worth of US products, including soybeans and cars, after Washington announced similar duties on Chinese goods following its investigation into Beijing’s intellectual property “theft”.
The tit-for-tat measures ramped up fears of a full-blown trade war with global repercussions. Earlier this week, China imposed US$3 billion worth of tariffs on 128 US products in retaliation for earlier US duties on steel and aluminium.
While the common refrain is that “nobody wins in a trade war”, the impact on economies and sectors will vary, analysts say, and in some cases might even be positive.


THE LOSERS
Asian export economies
Analysts say that Asian economies engaged in intermediary trading between China and the US will face the brunt of the impact of the trade dispute.
South Korea, Taiwan, Vietnam and Malaysia, all of which export goods – such as machine parts and components for communications equipment – used in the production of items that China then sells to the US, are vulnerable, said Steven Schwartz, senior director of sovereign ratings for Asia at Fitch Ratings.
Tommy Wu, a senior economist at Oxford Economics, said that as one of the world’s largest exporters Japan could also be at risk. The country shipped almost US$700 billion worth of goods last year, and China and the US were its top trading partners.
Its major exports – cars, computers and electrical equipment, as well as iron and steel – have all been in the cross hairs amid the Sino-US tensions.
China ‘will give as good as it gets’ in trade war with US
Chip makers in South Korea, Japan, Taiwan
South Korea, Japan, and Taiwan could all lose out if the trade war results in Beijing changing its semiconductor suppliers.
Mainland Chinese companies currently import about US$200 billion worth of microchips a year, most of them from South Korea, Japan and the self-ruled island of Taiwan.
However, if Beijing wanted to make concessions to Washington, which has called for China to reduce its trade surplus with the US by US$100 billion, it could do so by boosting its purchases of American chips, according to a recent report by Financial Times, citing people familiar with the matter.
Trump’s US$50b tariffs target Beijing’s tech strategy
Hong Kong
Another economy at risk is the semi-autonomous Hong Kong, which is a gateway for much of the trade that flows between mainland China and the US.
Paul Chan Mo-po, the city’s financial secretary, has warned that the rising trade dispute could affect one in five jobs in Hong Kong, citing US tariffs on solar panels and washing machine imports in January, then steel and aluminium last month.
“Free trade is an important foundation of our success,” he wrote in a blog post. “Trading and logistics is a pillar industry of Hong Kong, contributing to some 22 per cent of GDP and employing some 730,000 people.”




THE WINNERS
Soybean exporters
Beijing’s new 25 per cent tariffs on American soybeans – the United States’ single most valuable export to China, worth US$14 billion annually – will be a boon for other exporters of the grain, like Brazil and Argentina.
China is the world’s largest buyer of soybeans, importing 60 per cent of the traded crop, which it uses primarily for animal feed. With US soybeans set to become more expensive, Beijing would likely turn to other markets, including South America, said Allan von Mehren, China economist at the Denmark-based firm Danske Bank Markets.
“Agriculture, that’s one area where it’s pretty evident China would use to hit back at Trump,” he said.
Artyom Lukin, an international politics expert at Far Eastern Federal University in Vladivostok, said Russia might also be able to make up some of the shortfall in supply of soybeans.
US and China on brink of trade war, but big guns have yet to be fired
Pork and plane suppliers
China’s efforts to hit back at US pork products – with the US$3 billion worth of tariffs announced earlier this week – could be good news for alternative suppliers, like Germany, Spain and Denmark, von Mehren said.
Lukin said that Russian pork producers might also benefit from a slump in sales of American meat.
Other companies might benefit if China decides to buy European-made Airbus aircraft instead of Boeing planes from the US, von Mehren said.


Steel importers
The tariffs imposed by the United States on steel and aluminium imports could benefit other buyers of the metal, including the Philippines, its trade secretary Ramon Lopez said. As China sought to divert its supply to other markets it could be expected to trim its margins, he said in an interview with ABS-CBN News.
“There might be some excess supply or glut that can bring down prices of steel products,” he said.




Additional reporting by Kinling Lo


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