The US deepened the trade battle with a tariff hike from 10 to 25 on 200 billion worth of Chinese products as initially planned. This column provides the first estimates of trade and investment effects of the trade war on East Asia one of the most exposed regions.
The US-China trade war escalation shows no signs of slowing down since our last update in December.
Trade war impact on southeast asia. Between 2003 and 2008 Chinas export market. Singapore OCBC economists have warned that an all-out trade war between the worlds two largest economies could reduce the city states GDP by 03 percentage points this year The Straits Times reported. The US-China trade war has rapidly escalated promising to disrupt trade flows between the two countries and beyond.
A Nomura Holdings report last Monday named Vietnam as the biggest beneficiary of the trade war with an economic boost equivalent to 79 of its projected 2019 gross domestic product through the. And China are adding rocket fuel to the liftoff of Southeast Asias economies. The high tariffs will ease US demand for Chinese goods which will in turn reduce the demand for intermediate goods.
With increasing tariffs goods produced in Southeast Asia are now more attractive to US consumers. Valerie Anne Mercer-Blackman senior economist at the ADBs Economic Research and Regional Cooperation Department said a trade tension will have an indirect impact on Southeast Asian economies. In a poll of over 800 business leaders at the Refinitiv ASEAN Regulatory Summit in Singapore last week it was found that trade tensions between the US and China will have the greatest influence on ASEAN businesses in the next two years.
For its expansion UOB is planning to use digital technology and artificial intelligence rather than acquisitions. Generally Singapore and Malaysia are the most open ASEAN economies. American tariffs on Chinese-made goods have sped the shift of contract manufacturing.
By combining trade and tariff data it provides some order of magnitude of the expected effects. For Southeast Asia to truly reap the benefits of the trade war and hedge against its attendant risks it will have to step up its commitment to multilateralism proactively invest in. Nearly 40 per cent said they were unclear about what the impact would be in their countries.
The hope that an agreement would be finalized diminished after the 3-month truce agreement ended in May 2019. Southeast Asia is on the brink of a new economic cycle. In the end the companies that are able to navigate the regions complex social landscape while overcoming technological and logistics barriers will ultimately emerge.
In a nutshell economies that are most exposed to trade tensions are those that are. The indirect impact however would be broader should this trade war result in a slowdown in both countries as they are both major export markets for export-dependent countries in Southeast Asia. The Southeast Asian countries that grouped together during the cold war now have to choose between the US and China in a decisive test.
Joseph Incalcaterra of HSBC Global Research explains why Indonesia and the Philippines could be among the least impacted countries in Southeast Asia by the o. Here is how a trade war could impact four countries across Southeast Asia and how some of them are gearing up to combat the threat. Have a dominant manufacturing sector that is plugged into the globalregional value-chain.
The ASEANChina Free Trade Area ACFTA was signed in 2002 and reduced tariffs to almost zero on 90 of imported goods between the two regions. Trade tensions between the US. Companies are incentivised to boost their production capacity in Cambodia because of its good investment incentives and tax exemptions.
Southeast Asian thought leaders were also divided over the ramifications of the US-China trade war. Trade war is better than the Trans-Pacific Partnership for Vietnam. The trade war is pushing Asean to an ideological crossroads.
Singapore bank sees Southeast Asia as haven from trade war. The regions lower-middle income countries such as Indonesia and Cambodia have a chance to grow because of the Trump Trade War. For example an October 15 Bloomberg report citing both companies and academics used such quotes as This China-US.
Impact on ASEAN from a US-Sino trade war. Most exposed to US China in trade andor 2. A narrative is building that countries in Southeast Asia will be able to benefit from an all-out trade war between the US.
As the world focuses its attention on the US-China trade war it is likely that Chinese US and global companies will find themselves shifting their gaze towards Southeast Asia.