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Relations between Japan's Prime Minister Shinzo Abe and US President Donald Trump might change as Washington pushes Tokyo on US car imports. Photo: AFP

Winners and losers: how the trade war ceasefire might affect the fortunes of China’s partners and rivals

  • The 90-day grace period for world’s leading economies to renegotiate their relationship is an opportunity for other trading nations to reassess theirs

Tensions between the United States and China have eased – for now – with the two countries’ agreement not to impose further tariffs on each other.

China is hoping the US will scrap tariffs imposed in July, but other nations and industry players are also watching closely to see how their interests might be affected by the 90-day truce.

Here is a quick look at the parties likely to be affected by the China-US trade truce.

Vietnam

When the trade war between the US and China began on July 6, some companies looked at moving production to Vietnam to escape the tariffs.

Zhang Diansheng, of the Hang Sinh Business Service Centre in Ho Chi Minh City, said he received more than 130 inquiries between the end of August and end of November.

Zhang, whose company helps Chinese manufacturers move to the southeast Asian nation, said he expected the truce would only slow the relocation – not stop it.

“This might cause a slowdown in the move out of China [by businesses] that we saw between September and November,” he said.

“In a way, this [the ceasefire] might act as a salve for the exodus of Chinese enterprises”, which have been moving to Vietnam in large numbers since tariffs began to take effect.

But Zhang added that Chinese firms would continue moving to Vietnam in the longer term because of rising labour costs and stricter environmental regulations at home.

Japan

After reaching an agreement with China, the US may shift its trade focus to Japan. In a meeting on Friday with Japanese Prime Minister Shinzo Abe, US President Donald Trump said the US trade deficit with Japan was substantial and “we hope that we’re going to be balancing it very quickly”.

The Trump administration is expected to demand greater access to Japan’s car market, and to push Japanese carmakers to expand their manufacturing operations in the US. Japan does not impose tariffs on foreign cars, but Tokyo is expected to lower safety and environmental requirements for US vehicles.

Brazil and Argentina

China, which imports 60 per cent of the soybeans traded worldwide, bought 32.9 million tonnes of the crop from the US last year. But it is looking around for other suppliers after Beijing put a retaliatory 25 per cent duty on imports from the US. Chinese importers bought a record 12 million to 14 million tonnes of soybeans from Brazil for the October-November period, Reuters reported in September. Argentina has replaced China as the leading buyer of the US crop.

But China on Sunday agreed to buy more agricultural products from the US, and this will reduce China’s demand on other suppliers.

Europe

As with the United States, Europe has been pushing China to further open up its markets and stop forced technology transfer. European companies may be able to enjoy better access to Chinese markets and easier business environment if China is committed to reform.

 

This article appeared in the South China Morning Post print edition as: what next for China’s partners and rivals?
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