- American and Chinese consumers and producers are paying the price of the yearlong trade war, which has seen the US and China slap tariffs on billions of dollars’ worth of each other’s goods.
- US and Chinese importers have stopped buying from each other and turned to other countries instead.
- Vietnam and Mexico have hugely benefited from these policies.
- This runs counter to President Donald Trump’s claims that Chinese companies bear the brunt of the US tariffs, and that "trade wars are good, and easy to win."
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Vietnam and Mexico have emerged as the unexpected winners of the trade war between Washington and Beijing, as consumers and producers in US and China continue to bear the brunt of their countries’ tariffs on each others’ goods.
The US and China have been locked in a yearlong trade war which has no end in sight. Since March 2018, the two governments have slapped tariffs on hundreds of billions of dollars’ worth of one another’s products.
To avoid the extra taxes, American and Chinese importers are turning to other countries for their products — and new economic data is showing just how much the third countries have benefitted so far.
Reuters
Vietnam’s trade surplus with the US skyrocketed 45.5% year-on-year in the first quarter of 2019, the Financial Times reported.
The increase in Vietnamese exports to the US was particularly sharp for goods covered in Trump’s tariffs against China, the FT added, citing data from the US International Trade Commission.
Thomas Costerg, a senior economist at Pictet Wealth Management, told the FT: "The Vietnamese exports are taking up the baton and they have done that quite quickly, or there has been some rerouting through Vietnam of Chinese goods. For a small country like that it’s pretty impressive."
US imports from Mexico have also offset those from China over the past year. After President Donald Trump’s administration imposed tariffs on $16 billion worth of Chinese products last year, US imports from China decreased by $850 million, and those from Mexico increased by a similar amount, the International Monetary Fund noted in a Thursday blog post.
Scott Olson/Getty Images
China has also reduced its imports from the US as a result of the trade war, with US soybean producers being among the hardest hit.
The US was one of China’s largest soybean suppliers in 2017. However, Beijing cut its soybean purchases from the US by 80% last year in light of the trade war, and shifted its business to Brazil instead.
These shifts run counter to Trump’s claim last March, at the start of the trade factor, that "trade wars are good, and easy to win."
Trump rolled out a $16 billion bailout package for farmers on Thursday, though he maintained the false claim that Chinese companies bear the brunt of the trade war. Multiple economic studies have said otherwise.
Mark Makela/Reuters
American and Chinese consumers are suffering in the form of price rises, and are "unequivocally the losers" of the trade war, the IMF said in its Thursday post.
US importers are also paying "almost entirely" for President Donald Trump’s tariffs on Chinese goods, the IMF said.
Chinese importers will also be affected by its countries’ tariffs, but the overall effect is likely smaller because China imports fewer US goods.
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Source: Business Insider – ama@businessinsider.com (Alexandra Ma)