UN warns of currency wars and widespread protectionism if trade conflict escalates
Of the total $250 billion in Chinese products currently subject to U.S. tariffs, around 82 percent will instead be exported by firms in other countries, the study estimated. While 12 percent was estimated to be retained by Chinese companies, only 6 percent would be captured by domestic U.S. firms.
Meanwhile, of the U.S. exports subject to Chinese tariffs, about 85 percent would be captured by outside markets, UNCTAD estimated. The report said U.S. firms would likely retain less than 10 percent of those exports, while Chinese businesses would capture around 5 percent.
The countries expected to benefit the most were those that had the economic capacity to replace U.S. and Chinese firms. EU exports would capture $70 billion of U.S.-China bilateral trade, the report estimated, while Japan, Mexico and Canada would each gain around $20 billion.
The countries expected to see the highest percentage increase to their current total exports were Australia, Brazil and India.
“Because of the size of their economies, the tariffs imposed by Unites States and China will inevitably have significant repercussions on international trade,” Pamela Coke-Hamilton, head of UNCTAD’s international trade division, said at a press conference on Monday.
“While bilateral tariffs are not very effective in protecting domestic firms, they are valid instruments to limit trade from the targeted country. The effect of U.S.-China tariffs would be mainly distortionary. U.S.-China bilateral trade will decline and be replaced by trade originating in other countries.”