China trade war to boost Indian economy: United Nations study

American soybean farmers Trump trade war China

Washington and Beijing have slapped punishing tariffs on more than US$360 billion (S$486 billion) in two-way trade, which has weighed on the two countries' manufacturing sectors and sent jitters through global markets.

In his annual State of the Union address, Trump also called on China to make the kind of far-reaching "structural" changes to industrial policy that analysts say Beijing is likely to resist.

The report said Asian countries are likely to suffer most from protectionism.

A senior Trump administration official said that through ongoing talks about the US' 142 trade demands, the number of items Beijing deemed non-negotiable has been sharply reduced, The Wall Street Journal reported on Tuesday. In December, both countries agreed to hold off on new tariffs for 90 days to allow for talks.

India in February past year slashed the customs duty on imported motorcycles like Harley-Davidson to 50 per cent after Trump called it "unfair" and threatened to increase the tariff on import of Indian bikes to the US.

The implications of such a development would be "massive", the UNCTAD Director, Division on International Trade in Goods and Services, and Commodities, continued, adding that its effects would first of all involve "an economic downturn due to instability in commodities and financial markets".

"The implications are going to be massive", Pamela Coke-Hamilton, head of global trade at the UN Conference on Trade and Development, told a news conference on Monday.

The trade war between the United States and China has caused major disruptions for global businesses - but it may also bring benefits for some.

Smaller and poorer countries would struggle to cope with such external shocks, she said. If the tariff increase does, in fact, take place; it's not entirely clear how China will respond, but so far it's matched the U.S.'s tariffs tit for tat. It also warned that the effects could be felt everywhere.

The effect of US-China tariffs would be mainly distortionary.

The study indicates that European Union would be the victor, capturing around $70bn of new exports.

Trump has vowed to increase tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent now if the two sides can not reach a deal by 12:01 a.m. (0501 GMT) on March 2. And of the approximately United States dollars 85 billion in U.S. exports that are subject to China's tariffs, only about five per cent of this will be taken up by Chinese firms, according to the UN research. Japan, Mexico and Canada could grab over $20bn.

Australia, Brazil, India, Philippines, Pakistan and would also notice "substantial effects relative to the size of their exports", it said.

GENEVA-A US plan to hike tariffs on China next month could trigger an economic downturn and let other countries take over about $200 billion (22 trillion yen) of China's exports, a study by the United Nations trade and development agency UNCTAD said on Monday.



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