The US-China trade war could benefit Europe, Mexico and Japan

The US-China trade war could benefit Europe, Mexico and Japan

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

According to a study released this week by the United Nations Conference on Trade and Development, companies in Europe, Mexico, Japan and Canada could add tens of billions of dollars worth of export orders if the conflict continued.

"US-Chinese tariffs would be mainly distortionary," said Pamela Coke-Hamilton, head of UNCTAD's International Trade Division. "Bilateral trade between the United States and China will decline and will be replaced by trade from other countries."

The study warned that tariffs "help little domestic companies" in the United States and China. And even if they ended up benefiting exporters from other countries, they could also provoke a series of damaging negative effects around the world.

The US and Chinese governments are scrambling to reach an agreement before March 2. If they do not reach an agreement before the deadline, the United States has threatened to raise tariffs of $ 200 billion on Chinese products from 10% to 25%.

According to the UN, about 250 billion dollars in trade between China and the United States hit by new tariffs since July are likely to be transferred to more than 250 billion dollars .

According to the study, the European Union is expected to win the largest share, about $ 70 billion in new exports. Indeed, block economies are globally competitive and are most likely to increase their exports, the report said. Mexico, Japan and Canada could all add more than $ 20 billion in new exports.

"Bilateral tariffs are affecting global competitiveness for companies operating in countries that are not directly affected by them," said the UN.

Potential domino effect

But gains for some countries could be jeopardized by other aspects of the trade war, which contributed to the economic slowdown in China and the volatility of global markets.

A continuing tariff battle could further damage "a still fragile global economy" by disrupting global supply chains and causing turbulence on commodity prices and financial markets, the UN said. He warned that "more countries could join the fray" by imposing their own tariffs and that "trade tensions could degenerate into currency wars".

Although some European industries could benefit from trade driven by tariffs, many of the largest companies on the continent are far from being free from conflict because of their activities at the United States. global scale.

German car manufacturers Daimler (DDAIF) And BMW (BAMXF), which export high-end vehicles to China from their US factories, said last year that Chinese tariffs on US-made cars were hurt their profits.

The dispute between the United States and China has also distorted key industries in some economies. Rates on Americans soy prompted Chinese importers to switch to Brazilian suppliers last year.

But Brazilian farmers have struggled to capitalize on this development, according to the UN. They are reluctant to make large investment decisions that could become unprofitable if rates are reversed.

The rise in soybean prices in Brazil, attributable to China, has also resulted in higher costs for local businesses that must purchase soybeans for animal feed and other uses.