LONDON – A trade war between China and the US could impact smaller, global countries more severely than either of the two countries at the heart of the trade dispute.
Friday is the deadline for the US to impose sweeping tariffs on Chinese goods and China has promised to retaliate with tariffs of its own if the US does follow through with its threat. China’s commerce ministry said on Thursday that the United States is “opening fire on the entire world”, warning that Washington’s proposed tariffs on Chinese goods will hit international supply chains.
A new model by economists at Pictet Asset Management has produced a list of countries that would be most economically damaged by an escalation in the trade war, Reuters reported.
Countries are ranked by how integrated they are into the global value chain. The countries most at risk are those which supply raw materials to other countries, which then use those raw materials in the production of goods for export. Taiwan, South Korea, Singapore, and Ireland are all vulnerable, according to Pictet.
Here are the top 10 countries most at risk in the event of an all-out global trade war. (The percentages show how much of a country’s exports are part of global supply chains):
10. Ireland: 59.2%
The country is home to Google HQ in Europe, and the economy is dominated by high-tech and banking services. It ranks high on foreign direct investment and is vulnerable to fluctuations in the global economy.
9. Iceland: 59.3%
Like others on this list, the country is relatively small and sensitive to market volatility. Major industries include tourism, fish processing and aluminium smelting. Most of its exports go to the EU, US, and Japan.
8. Malaysia: 60.4%
China is Malaysia’s largest trading partner, which makes it vulnerable to this potential trade war. Top industries include tin, rubber, palm oil and finance for the Islamic world.
7. Singapore: 61.6%
The highly developed free market economy has been ranked as one of the most open in the world, exporting electronics, chemicals and financial services. There is over $US100 billion of annual bilateral trade between Singapore and China.
6. South Korea: 62.1%
Known for being one of the most technologically advanced economies in the world, it produces electrical machinery, cars, steel and ships. The US, China, and Singapore are top trading partners.
5. Czech Republic: 64.7%
A member of the EU, its main trading partners are Germany and other EU countries, but focus on high-tech engineering makes it globally interconnected.
4. Hungary: 65.1%
Hungary has an export-oriented market economy which is heavily dependent on foreign trade. Agriculture, autos, IT, electronics and chemicals are all key industries.
3. Slovak Republic: 67.3%
Slovakia has strong services, heavy industry, and agricultural sectors. Its foreign trade has been growing rapidly year-on-year, but the trade war could have a severe impact.
2. Taiwan: 67.6%
This capital and technology-intensive economy off the coast of China is among the most globalised in the world. Its major exports include electrical machinery like semiconductors, computers, and plastic. Taiwan is notoriously vulnerable to global economic downturns.
1. Luxembourg: 70.8%
Luxembourg’s major industries include banking, information services, steel, and other industrial outputs. The small European country has the second highest GDP per capita after Qatar but is very dependant on trade, making it vulnerable to fallout from the Sino-US confrontation.