Why forcing countries to choose sides in a trade war could benefit China, not the US

In a China-US trade war, many countries around the world would come under pressure to take sides. We pray it does not come to this. But let’s say it does. Whose side will they take? Even five years ago, that question would have been a no-brainer – the US, by a mile.

But today? The answer would be trickier, and not at all comforting to US consumers, companies or the trade war battle team assembled around the White House.

To help gauge an answer, I looked at the world’s top 20 economies. Then for good measure I looked at the 21 Asia-Pacific Economic Cooperation (Apec) economies. I browsed each of these economies’ 2017 export and import numbers to discover how important the US and China were to these economies, either as sources of imports or as leading destinations for their exports. I looked at just goods trade, omitting the services trade which is messier to compute.

The results were perhaps not unexpected, but were sobering nonetheless. As for the world’s 20 largest economies, China is the leading source of imports for 11. It is the second most important source of imports for a further four. For only two countries – France and Switzerland – is China not one of their top five sources of imports.

By contrast, the US is the major source of imports for just two – Canada and Mexico, and is in the top five for just 13 more. That means that for five of the world’s top 20 economies, the US was not among their top five sources of imports.

Now look at China as an export destination, and it is the most important export market for seven of the top 20, and one of the top five export markets for seven more. Of the other six economies for which China is not in their top five destinations, five are European economies (France, the UK, Italy, Spain and the Netherlands) and the sixth is Turkey. Since Europe’s economies mainly trade among themselves, this is not surprising.