The ongoing trade war between the United States and China is harming both economies, the UN said Tuesday, with a sharp drop in exports and higher prices for consumers.
In a fresh report, the UN Conference on Trade and Development (UNCTAD) examined the repercussions of bruising tariff hikes imposed by the world’s two largest economies, and found that both were left considerably worse off. That in turn risks taking a toll on the entire global economy, the agency cautioned.
After nearly 5 months of protests and a persistent trade war between the U.S. and China, Hong Kong's economy officially fell into recession in the third quarter https://t.co/5Xfx6JOawu
— The New York Times (@nytimes) November 1, 2019
“A lose-lose trade war is not only harming the main contenders, but it also compromises the stability of the global economy and future growth,” head of UNCTAD’s international trade and commodities division Pamela Coke Hamilton said in a statement.
Vietnamese exports to the US meanwhile swelled by $2.6 billion, driven in particular by sales of communications equipment and furniture.
The US-China trade war has since last year seen tit-for-tat tariffs imposed on hundreds of billions of dollars worth of goods.
The UNCTAD analysis, which only looked at the impact of the US tariffs, found they had caused a 25-percent decline in US imports of sanctioned Chinese products in the first half of 2019 alone.
Read more: Trade Wars: Trump’s Imagination of a New World Order?
“The United States tariffs on China are economically hurting both countries,” the report concluded.
US consumers paying most
UNCTAD economist Alessandro Nicita told reporters in Geneva that during the initial phase of the conflict, “most of the costs of the tariffs have been passed down to US consumers or firms.”
Trump’s trade war induced farm bailout . . . has cost the country more than double the 2009 GFC auto rescue. https://t.co/wdDzc9vgtS
— Steven Rattner (@SteveRattner) October 31, 2019
But he said that Chinese exporters were also increasingly lowering the prices of goods subjected to tariffs in what appeared to be a bid to maintain their US market share.
While the report did not consider the impact of Chinese tariffs on US imports, it stressed that “the qualitative results are most likely to be analogous: higher prices for Chinese consumers and losses for United States exporters.” Not everyone is losing out however.
The US-China trade war has since last year seen tit-for-tat tariffs imposed on hundreds of billions of dollars worth of goods.
The report, which was based on an analysis of recently released trade statistics, found that of the $35 billion lost in Chinese exports to the US market in the first half of the year, about $21 billion had been diverted to others like Taiwan, Mexico and the European Union.
The remaining $14 billion, it said, was either lost or captured by US producers. According to the report, Taiwan saw the most benefit, gaining $4.2 billion in additional exports to the US in the first half of the year, especially by selling more office machinery, which was the sector hardest-hit by the tariffs.
Trade wars have consequences – Here are the biggest winners and losers of imports to the US in the past year. More on the US #tradewar in our latest blog post: https://t.co/0i1RGX6fW9 #Macrobond #chartoftheday #US pic.twitter.com/z6gdka2nfm
— Macrobond Financial (@MacrobondF) October 28, 2019
Mexico also saw a significant export-hike, raking in an additional $3.5 billion in exports to the US, especially in the agri-food, transport equipment and electrical machinery sectors. And the European Union gained around $2.7 billion in additional exports to the US, mostly in the machineries sectors.
Vietnamese exports to the US meanwhile swelled by $2.6 billion, driven in particular by sales of communications equipment and furniture. Nicita pointed out that a different set of countries were likely benefitting from the tariffs imposed on US goods, pointing for instance to increased Brazilian soybean exports to China.
Read more: Trump claims he has defeated China in the trade war, but has he?
He however warned that “even countries that are gaining in terms of exports may not be gaining in net terms.” This, he said, is because “the global economy maybe is going to shrink a lot more, especially if this trade war is going to escalate even further.”
On Tuesday, reports in the Wall Street Journal and Financial Times said US officials were considering rolling back some of the tariffs President Donald Trump had imposed on China, to seal a “phase one” trade deal with Beijing.
AFP with additional input by GVS News Desk.