Can Argentina benefit from the trade war initiated by the United States? UU.?

President Trump's tariff measures, at war with China, are one of the topics of discussion at the G20 in Buenos Aires. The question is whether some countries, such as the summit host, could benefit in the short and long term.

The global trade war started by Donald Trump is far from over. This Friday, July 20, the president of EE. He said he was prepared to apply tariffs on all imports from China to his country – which amounted to some $ 500,000 million – since, in his view, there was a trade imbalance that unfairly China.

In July, tariffs of 25% (US $ 34 000 million of Chinese imports to the United States) on industrial and technological products have already entered into force. China responded in the same currency with the same amount of tariffs on US imports, particularly in the agricultural sector. And both should follow this dynamic.

In general, it is considered that a trade war with these characteristics has a negative impact on the entire planet. The head of the International Monetary Fund (IMF), Christine Lagarde, warned at the G20 summit in Buenos Aires that "in the worst case, with the current figures, without taking into account the most recent announcements, the world GDP it can to be reduced by about 0.5%. "

All finance ministers and central bankers have agreed on the risks of escalating this trade war. However, in the case of Argentina, in the short term, it could present opportunities or at least be appreciated with caution. Dante Sica, the country's production minister, told France 24: "I would not say optimistic or pessimistic, we see the evolution."

Mid-way opportunities for Brazil and Argentina

fashions, Sica believes that there might be room for maneuver for Argentine profit. "This trade war, of which we do not know until it will eventually climb, generates opportunities, especially for the productive structure of Argentina, which in many cases is competitive with that of the United States. "

In this line, it could have an impact on the prices of certain raw materials such as soybean, of which Argentina is the world's third largest producer (with between 36 and 55 million tons per year ), behind EE United States (about 119 million) and Brazil (about 114 million) In fact, soy is one of the American products most affected by Chinese tariffs. The United States provides the largest portion of the 100 million tonnes of beans Result: this could represent a great opportunity for Argentina

At the Rosario Stock Exchange (BCR) – the largest sack of cereals in Argentina -, they believe that, for the 2018-2019 soybean campaign, if tariffs are maintained, South America will cover a greater proportion of Chinese demand than it has done up to now. Now. However, the benefits will come directly from Brazil. This would not have an impact on the external placement of all the products of the soybean complex in Argentina, "says Blas Rozadilla, an badyst at BCR, in a letter sent to France 24.

If the Brazil was growing, however, As Argentina's largest trading partner, this could have a positive effect, and the Brazilian Finance Minister, Eduardo Guardia, told a group of journalists (including one from France 24) in As part of the G-20 extra income that your country could get by replacing US products, in the short term, an estimate of about $ 2,000 million a year would be given.

Except in the long run, the effects of a trade war would be detrimental to all, and is a threat to the global economy that is being discussed this weekend during the meeting. Buenos Aires

Soybeans and Argentine Meat, Featured Products

Back to Argenta Ina, Agricultural Adviser Javier Preciado, admitted that the imposition of tariffs has come to a bad time for the Southern Cone country, which saw its harvest increase from 57 million to 36 million, between the campaigns 2016-2017 and 2017-2018. This implies that this year the country "would not be able to export beans", because the local industry of flour and oil needs all the production. As pointed out by Rozadilla, one should expect next season and see if the tariffs remain applicable.

Argentina is the leading supplier of some processed soy products, not raw soy, which is the most important. Buy China today. But for now, this country is buying practically no flour and Argentine soybean oil. Although Rozadilla, of the BCR, says that the Asian country has indicated that it could buy more "rapeseed and sunflower seeds and bring in more soybean meal, rapeseed meal, sunflower meal and fishmeal to cover the lack of supply "

If this happens, Argentina would see a positive impact, since the nation is the world's largest exporter of soy flour and the product that brings the most currency to the world. country (nearly $ 10 billion a year, according to the BCR). However, since the Chinese tariff is on American soybeans and not on its derivatives (oil or flour), it is possible that EE. UU increase the latter's exports to China, seeking to compete with Argentina with the price, Rozadilla believes.

Another opportunity product against Chinese tariffs against the United States. is the meat: the governments of China and Argentina have signed a recent agreement to allow the entry of meat from the South American country in Asia.

According to an badysis conducted by the Foundation of the Institute for International Agricultural Negotiations of Argentina, "there are products that could take advantage of this situation and be exported to destinations that could leave vacancies in the United States, we must not forget that the closure may be circumstantial. "That is why he suggests that Argentina focuses on a market consolidation strategy, beyond these fluctuations structural. Something for which the current situation may offer an opportunity, but not the definitive answer.

In addition, from the point of view of international access to credit -some key to the South American country-the Argentine vision of the tariff increases initiated by Trump is decidedly pessimistic

" trade war between the United States and China creates a much more fragile and unfavorable financial situation in the world, "he told France 24 Martin Alfie, chief economist Radar," and that in a context where Argentina needs foreign funds to re-enter to change its exchange rate situation is bad news. "

And that is the tariffs imposed by EE. UU they make the products concerned more expensive (or force them to buy more expensive alternatives), which can lead to an inflationary escalation that monetary authorities may seek to contain by raising interest rates. And by raising interest rates in the United States In the United States, it becomes less attractive for investors to provide loans to Argentina (both to the public and private sectors), a market that pays more interest, but is considered much riskier

. UU and China could make products more expensive on a global scale, such as information technology and technology, which would also have an impact on Argentina and the rest of the world, who should pay more for products that it does not manufacture locally. that the Argentine Production Minister remains calm and his eyes wide open. "Today, our eyes are very cautious, very concerned, because these trade wars still have a negative impact on trade, but with a keen eye to try to take advantage of any market opportunities that may arise. ", says Sica in France 24.

And, as one says in all countries that worry about the imposition of tariffs on both sides, they would fundamentally prefer that this does not happen.

First modification: 22/07 / 2018