- American and Chinese consumers and producers are paying the price of the yearlong trade war, which has seen the US and China slap tariffs on billions of dollars’ worth of each other’s goods.
- US and Chinese importers have stopped buying from each other and turned to other countries instead.
- Vietnam and Mexico have greatly benefited from these policies.
- This runs counter to President Donald Trump’s claims that Chinese companies bear the brunt of the US tariffs and that “trade wars are good, and easy to win.”
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Vietnam and Mexico have emerged as the unexpected winners of the trade war between Washington and Beijing, as consumers and producers in US and China continue to bear the brunt of their countries’ tariffs on each other’s goods.
The US and China have been locked in a yearlong trade war that has no end in sight. Since March 2018, the two governments have slapped tariffs on hundreds of billions of dollars’ worth of each other’s products.
To avoid the extra taxes, American and Chinese importers are turning to other countries for their products – and new economic data gives an idea just how much the other countries have benefited.
Vietnam’s trade surplus with the US skyrocketed 45.5% year-over-year in the first quarter of 2019, the Financial Times reported.
The increase in Vietnamese exports to the US was particularly sharp for goods covered in Trump’s tariffs against China, the Financial Times added, citing data from the US International Trade Commission.
“The Vietnamese exports are taking up the baton and they have done that quite quickly, or there has been some rerouting through Vietnam of Chinese goods,” Thomas Costerg, a senior economist at Pictet Wealth Management, told the Financial Times. “For a small country like that it’s pretty impressive.”
US imports from Mexico have also offset those from China over the past year. After President Donald Trump’s administration imposed tariffs on $US16 billion worth of Chinese products last year, US imports from China decreased by $US850 million, and those from Mexico increased by a similar amount, the International Monetary Fund noted in a Thursday blog post.
China has also reduced its imports from the US as a result of the trade war, with US soybean producers being among the hardest hit.
These shifts run counter to Trump’s claim last March, at the start of the trade dispute, that “trade wars are good, and easy to win.”
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Trump rolled out a $US16 billion bailout package for farmers on Thursday, though he maintained the false claim that Chinese companies bear the brunt of the trade war. Multiple economic studies have said otherwise.
American and Chinese consumers are suffering in the form of price rises and are “unequivocally the losers” of the trade war, the IMF said in its Thursday post.
US importers are also paying “almost entirely” for Trump’s tariffs on Chinese goods, the IMF said.
Chinese importers are similarly exposed to China’s tariffs, but the overall effect is likely to be smaller because China imports fewer US goods.
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