Rounding a year since US President Donald Trump opened fire to start a trade war between the two powers of the United States and China, the war has reduced each country’s export turnover to about $ 20 billion. In this context, Chinese and American companies are rearranging their supply chains, thus paving the way for major changes in global trade.
The commercial conflict began on July 6 last year, when Washington began applying a new tax of up to 25% on $ 34 billion of goods originating from China. This has led to a series of Chinese retaliation and new sanctions imposed by the US although the two sides have resumed negotiations, but it seems the two sides still cannot find a common voice. in the main issues.
Mutual tax reprisals have affected both economies. For the US, economic experts say the US economy will suffer serious losses due to a trade dispute between Washington and Beijing. On the other side, China is losing its momentum because it faces a trade war with the US, increasing large debts and falling domestic currency.
US exports to China began to narrow down shortly after Beijing imposed tax on US goods in retaliation for US President Donald Trump’s move in July last year to impose punitive taxes on with a variety of Chinese imports. By the end of the year, US exports to China had fallen by nearly $ 4 billion compared to the previous 12 months.
Due to the effects of tariffs, many Chinese shipments across the Pacific were unable to dock, with estimated losses of more than $ 4 billion. According to economist Gary Clyde Hufbauer from Peterson International Economics Institute, there are many reasons for this, but the main reason for explaining the floating of these ships is the different types of goods. that US and China export.
China’s tariffs are mainly applied to US agricultural products and fossil fuels - commodities that can be easily purchased from other countries. In contrast, the majority of Chinese exports to the US are typical products that cannot easily be supplied by other countries at similar low costs.
And despite concessions from Beijing, the United States continues to implement its tax-imposed policy and on July 6, 2018, the US imposed a 25% tax on about $ 34 billion in machinery. Chinese electronics and high-tech equipment.
In response, Beijing in turn applied tariffs to the same size and scope for US agricultural, car and seafood products. China has complained about the US taxation at the WTO and said that the US violated the agreed rules of this international organization.
On August 23, 2018, the United States imposed tariffs on $ 16 billion of other Chinese goods. In contrast, China applies a 25% tax on US $ 16 billion of US goods, including Harley-Davidson motorcycles, bourbon and orange juice.
About a month later, Washington taxed 10% on $ 200 billion of imports from China and Beijing also imposed tariffs on US $ 60 billion worth of goods.
At the present time, tariff rates are likely to remain the same when the two leaders have not found a common voice in the trade issue. In this context, exporters in both countries are under tremendous pressure from reciprocating retaliation, even many multinational corporations with factories in China have to consider the plan of re-establishing. his supply chain.
Mr. Gerry Mattios - Vice President of US consulting firm Bain & Company, said the initial companies had a wait-and-see attitude, but it seems that they no longer have the patience and start rearranging the supply chain. their.
Not only companies, big US corporations move their factories, but even some Chinese companies are merging into this shift. China’s major electronics maker Goertek, which assembles Apple’s AirPods, began building a factory in northern Vietnam at a cost of $ 260 million.
And as more and more Chinese manufacturers take actions to protect their activities from the tariff cycles, perhaps more than anyone else, President Xi Jinping’s government will feel hurt. Best.
The tariff war between the US and China has dramatically changed the global trade context. From July last to April last year, Brazil’s soy and other oilseed exports to China increased by 48% during the year and Canada’s exports increased by 52%, replacing those of More expensive oil of America. Even some experts predict that Brazil will spend 13 million square meters of agricultural land to meet China’s soybean demand.
On the other hand, US fuel exports, including liquefied natural gas, fell more than 50% after China imposed a 25% additional tax, while Saudi Arabia’s fuel exports. increased 51% and Russia increased 40%.
When Washington and Beijing were playing with each other, many agricultural and resource-rich countries were targeting their exports to China’s huge market. Vietnam, Mexico and South Korea are increasing exports of electrical and machinery equipment to the US, replacing Chinese suppliers that are subject to taxes.
Vietnam’s exports to the US increased by 20% over the same period (from July 2018 to April 2019), when Washington imposed the first tariff on China. " Vietnam will probably benefit most from US-China trade, " said an analyst with Nomura Holdings.
However, according to market observers, Vietnam’s exports to the US may include so-called "loop exports", in which China forged the origin of the product. At the end of last June, US President Donald Trump alluded to imposing sanctions on Vietnamese goods if Vietnam did not take strong measures to eliminate this situation.
