Macroscope | The US-China trade war has produced more losers than winners
- Vietnam is the stand-out winner, but even it has been hit by US tariffs for its large trade surplus
- The rebalancing of trade and production means South Korea, Taiwan and Japan are seeing bigger demand from US – but an ever bigger drop from China
Markets can breathe a sigh of relief but the global economy is not out of the woods yet. Without the rolling back of tariffs, the protectionist acts by both China and the US will continue to weigh on the global economy and darken the growth outlook.
Much research has been done to quantify the impact of the trade war on the two countries. Our analysis shows that China’s exports to the US have contracted by more than 7 per cent in the first five months of this year, down from double-digit growth before the tariffs came into effect. But if one focuses only on the tariffed goods, China’s shipments to the US have fallen by as much as 30 per cent.
The other victim of the trade war is the US consumer. According to recent research by the Federal Reserve Bank of New York, the tariffs imposed last year had reduced US household incomes at a rate of US$1.4 billion per month. An updated analysis predicts that the latest tariff hike on US$200 billion of Chinese goods would cost the average US family an extra US$831 annually due to higher prices and loss of economic efficiency.
Sadly, the pain does not stop there. As the saying goes, when two elephants fight, it is the grass that suffers.