Who will be the biggest losers from a China-US trade war truce?
Some of China’s major suppliers could lose out if Beijing diverts purchases to the US to placate Washington, analysts say
Exporters in Brazil, Australia and Russia could feel the pinch if China switches suppliers of some of its big-ticket imports to head off a trade war with the United States, according to analysts.
That was the assessment after two days of “constructive” high-level talks in Washington last week yielded a commitment from China to “substantially” reduce the trade imbalance between the two countries.
As a result, US Treasury Secretary Steven Mnuchin said the US expected American agricultural exports to China to rise by between 35 and 40 per cent this year and energy purchases to double over the next three to five years.
That could leave some of China’s trading partners, including its biggest soybean supplier Brazil, beef producer Australia, and even regional semiconductor makers, out in the cold if China shifts orders to the US.
“The state-led efforts to increase China’s imports from the US will lead to trade diversion – other economies will see their exports to China fall as a result,” Louis Kuijs, chief Asia economist of Oxford Economics, wrote in a note.
Washington wants Beijing to cut the bilateral trade gap by US$200 billion by the end of 2020, or more than half of last year’s US$375 billion difference, based on US figures.
Kuijs said that target would be “practically impossible” to meet.
