US President Donald Trump and his Chinese counterpart Xi Jinping have given themselves until March 1, 2019 to try to establish a trade agreement. Like all conflicts, there will certainly be losers and winners. “The countries that should benefit the most from the tensions between the United States and China are those that are the most competitive and have the economic capacity to supplant US and Chinese companies,” says UNCTAD (United Nations Conference on Human Rights). Trade and Development) in its report on “Key Trade Policy and Trends in 2018”.
It shows that EU exports are the most likely to increase, with about $70 billion in bilateral trade between the United States and China ( $ 50 billion of Chinese exports to the states And US $20 billion in US exports to China). Japan, Mexico and Canada are expected to benefit from more than $20 billion each in additional exports.
Although these figures do not represent a significant share of world trade (which amounted to about $17 trillion in 2017) for many countries, they represent a substantial share of their exports. For example, the approximately $27 billion in trade between the United States and China that would be captured by Mexico accounts for a sizeable share of Mexico’s total exports, about 6%.
Substantial effects on the level of their exports are also expected for Australia, Brazil, India, the Philippines, Pakistan and Vietnam. “Due to the size of their economies, customs duties imposed by the United States and China will inevitably have significant repercussions on international trade,” said Pamela Coke-Hamilton, who heads Unctad’s International Trade Division..
“The impact of tariffs between the two major powers would be mainly disruptive. Bilateral trade between the parties will diminish and will be replaced by trade from other countries, “said the official.
In this trade war, each party tries to save time and offers alternative solutions. Thus, the experts of the institution advocate “a solution that, while avoiding further escalation, would also solve the problems related to non-tariff measures (eg subsidies and intellectual property rights)”.
Several sectors would be directly or indirectly affected such as chemicals, metals, machinery, electronics and motor vehicles… Indirectly, the effect would also be passed on to intermediate inputs (semiconductors, auto parts, for example). ).
The study also points out that even for countries whose exports are expected to increase in this battlefield, the results will not all be positive. The soybean market is a good example.
In a context of rising tariffs, trade is diverted. Who should benefit? The countries that would benefit most “are those where companies can compete with US and Chinese companies.” It means having a production capacity and relying on logistics infrastructure to be competitive. In this respect, developed countries and large developing countries will benefit most.
■ Financial Market Disruption: While some countries will see a sharp rise in their exports, negative global effects are likely to dominate. A common concern is the inevitable impact that trade disputes will have on the still fragile global economy. An economic slowdown is often accompanied by price disruptions in commodity markets and in financial and monetary markets. They will all have important implications for developing countries.
■ And on foreign currencies: One of the main concerns is the risk that trade tensions will degenerate into wars on the currency market, making it more difficult to service dollar-denominated debt. For, countries may deem it appropriate to let their currency depreciate to gain competitiveness (or be unable to defend their currency against speculative attacks). This has happened for some currencies during the 2008-2009 economic crisis, and this could happen again if the global economy slows down considerably. The most indebted countries if they can not defend their currency will be the most vulnerable.
■ The domino effect: In an interconnected global economy, the domino effect created by the giants of commerce is likely to go beyond the countries and sectors targeted. Tariff increases penalize not only the assembler of a product but also the suppliers throughout the production chain. For example, the high volume of Chinese exports affected by US tariffs is likely to have the greatest impact on East Asian value chains. Unctad estimates that they could thus fall by about 160 billion dollars.
■ Impact on the Moroccan economy: As Morocco’s main trading partner is the European Union, trade tensions between China and the United States will have a limited direct impact. However, Morocco, like many developing countries, will suffer indirect negative impacts on the global economy.
