The US-China trade war is creating a large group of beneficiary countries as importers seek alternative source countries to avoid tariffs, according to a new UN study.
However, the study by United Nations Conference on Trade and Development (UNCTAD - the main UN body dealing with trade, investment and development issues) found the net impact of tariffs between the two largest global economies is negative, with the risk of an escalation in conflict threatening a damaging currency war, and increasingly protectionist policies hurting the weakest economies.
UNCTAD’s ‘Key Statistics and Trends in Trade Policy 2018’ estimates that of the $250 billion in Chinese exports subject to US tariffs, about 82% will be captured by firms in other countries, about 12% will be retained by Chinese firms, and only about 6% captured by US firms. Similarly, of the approximately $110 billion in US exports subject to China’s tariffs, about 85% will be captured by firms in other countries, US firms will retain less than 10%, while Chinese firms will capture only about 5%.
The results, said UNCTAD, were consistent across different sectors, from machinery to wood products, and furniture, communication equipment, chemicals to precision instruments.
“The reason is simple: bilateral tariffs alter global competitiveness to the advantage of firms operating in countries not directly affected by them,” said the organisation. “This will be reflected in import and export patterns around the globe.
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