The ongoing trade war between the US and China is bringing a windfall for many Asian and South American nations. Last year, the US hiked tariffs on billions of dollars worth of Chinese products. Beijing was quick to retaliate. As the trade talks failed, the Trump administration slapped 25% tariff on $250 billion worth of Chinese goods. China retaliated by imposing tariffs on $110 billion worth of US imports. Here we take a look at the top 10 biggest winners from the US-China trade war.
No end in sight for the US-China trade war
Washington is considering additional tariffs on the remaining $325 billion worth of Chinese imports. According to the World Trade Organization, the trade war is contributing to global uncertainty. The US targeted Chinese products ranging from industrial equipment to electronics to consumer items. The Chinese have targeted US products such as chemicals, medical equipment, coal, and agricultural products.
The increased tariffs on Chinese goods make US-made products cheaper than Chinese imports, encouraging consumers to buy American goods. Trump is also using the trade tariffs to negotiate a favorable deal with China.
Japanese investment research firm Nomura has released a report titled Exploring US and China trade diversion, shedding a light on the US-China trade war on the world economy. Nomura analysts Rob Subbaraman, Sonal Varma and Michael Loo warned that we could see further disruption in the electronics supply chain as the two countries fight over technology. The US has imposed a ban on Chinese electronics heavyweights ZTE and Huawei.
Nomura looked at the world’s 50 largest economies between the first quarter of 2018 and the first quarter of 2019 to see how much they have benefited as the US and China both substitute their imports from one another to third-party countries. The two countries are importing fewer goods from each other, mainly products that attract high tariffs. As a result, more than half of the 1,981 tariffed items in the trade war have been re-routed to other countries.
The substitution is pretty small compared to the sizes of the US and Chinese economies. But it’s large enough to boost the GDP and exports of many smaller economies. The substitution has shaved 0.5% from China’s GDP and 0.3% from the US GDP this year.
Ranked: Biggest winners from the trade war
These are the top 10 biggest winners from the US-China trade war, according to Nomura.
The trade war has led China to shift the import of soybeans and other agricultural goods from the US to Brazil. As a result, the additional exports to China boosted Brazil’s GDP by 0.7% this year.
Singapore, which is already a major trade partner of China, will be one of the biggest winners of the trade war. It exports gold and a number of other products to China. According to Nomura, Singapore will get a 0.7% GDP boost because of increased exports to China. Singapore also stands to benefit from the relocation of manufacturing away from China.
8- South Korea
South Korea is a major exporter of electronics and motor vehicle components to the United States. The US-China trade war has caused the US to shift some of its imports from China to South Korea, boosting its GDP by 0.8% this year. The US imports from South Korea are estimated to jump from $74.29 billion last year to $87.96 billion this year.
Mexico’s exports to the US are expected to jump from $346.5 billion in 2018 to $365.2 billion this year, primarily because of the US-China trade war. Nomura estimates the additional US imports will contribute 0.8% to Mexico’s GDP.
6- Hong Kong
Hong Kong is a semi-autonomous, special administrative region of China. It will see a 1% jump in its GDP this year as China replaces some of its US imports with Hong Kong goods. But it also stands to lose some business with the US.
The trade war will lead to a 1.2% jump in Argentina’s GDP this year, entirely because of increased exports to China. Beijing is diverting its orders for soybeans, grains, cotton, and other agricultural products from the US to Argentina and other countries.
Malaysia is the fourth biggest winner from the trade war. Many electronics manufacturers are relocating production from China to Malaysia to avoid US tariffs. China has also started importing more natural oil and electronic items from Malaysia. The country’s GDP will get a 1.3% boost this year due to the trade war. If the US hikes tariffs on the remaining $325 billion of Chinese imports, Malaysia’s electronics sector will benefit further.
Chile has seen a dramatic surge in exports to China, boosting the country’s GDP by 1.5% this year. Chile exports copper, soybeans and other agricultural products to China. Its exports to the US are also expected to grow slightly.
Taiwan is a leading manufacturer of electronic products and office machines. The diversion of US imports from China to Taiwan will help boost Taiwan’s GDP by 2.1% this year. Despite the increased exports to the US, Taiwan’s total exports fell 3.3% in April due to falling demand in China. Notably, China is Taiwan’s largest trading partner, accounting for nearly 30% of its exports.
According to Nomura, Vietnam is by far the biggest winner in the US-China trade war. Many electronics vendors are relocating their manufacturing facilities from China to Vietnam to avoid the US tariffs. The trade war is estimated to boost the country’s GDP by 7.9% this year. China has also increased the import of electronic items and agricultural products from Vietnam.