US-China trade war takes toll on Washington's allies
(Baonghean.vn) - An erupting trade war between the US and China could damage the economies of US allies such as South Korea, Japan and Taiwan, as these are major suppliers of components and raw materials used in exports subject to President Donald Trump's tariffs.
 |
| As Washington imposes tariffs on Chinese trade, it also poses a risk to China's foreign suppliers. Photo: AP |
Imports account for about half of China’s total exports to the United States, meaning the tariffs Washington imposes on Beijing could trigger a chain reaction in countries that produce the components needed to make finished goods sold in the United States.
As Washington imposes tariffs on Chinese trade, it also puts China's foreign suppliers at risk, thereby undermining America's leadership role in the region.
An example is the iPhone production line: mainland China imports memory chips from South Korea and Taiwan, displays from Japan and South Korea, designs from the US, and Beijing assembles these “components” into a finished iPhone.
"From a value-added perspective, when an iPhone is shipped from China to the US, it is actually being shipped from Korea, Taiwan, Japan, China, and the US itself, which is shipping exports to the US itself," said an economist at Deutsche Bank in Hong Kong. "In fact, nearly 37% of China's exports to the US in 2015 included value-added components imported from other countries."
 |
| iPhone assembly plant in China. Photo: Getty |
According to statistics from the World Bank (WB), the main countries supplying raw materials for China's exports in 2016 were South Korea, Japan, Malaysia, Thailand, Vietnam, Singapore, the Philippines, Germany and Australia, including the US.
“The escalation of trade tensions between the US and China will have negative impacts elsewhere, as international trade, confidence and investment are targeted at a sensitive time for the global economy,” said Louis Kuijs, Asia researcher at Oxford Economics in Hong Kong. “The impact will be severe on economies involved in the supply chain… especially Japan, South Korea, Taiwan and other East Asian economies.”
However, according to this expert, in the long term, some low-income economies may benefit from the US's decision to impose tariffs on China, such as Vietnam, Thailand and Malaysia, because these countries can attract foreign direct investment./.
