During the first half of 2019, only Taiwan and Vietnam could increase their exports to the United States substantially at the expense of Chinese firms, among Asian countries. Countries like India or Bangladesh in South Asia did not perform very well, despite initial expectations. The biggest gains went to US-based companies which recovered a larger share of their big home market and Mexican firms, on account of their locational advantage.
These facts came to light in a recent survey conducted by UNCTAD authorities. UN analysts reported that the US sanctions on China and retaliatory measures announced by Beijing were part of a ‘lose-lose’ game that contributed to an economic slowdown and affected worldwide growth.
During Jan-June period in 2019, Chinese exports to the US dropped by $35 billion year-on-year. However it speaks volumes for the overall resilience of the China’s export sector that the figure represented only a 25% drop in its aggregate exports to the US. During this period, the US had taken a series of steps to cripple China’s trade.
China came up with some damaging countermeasures of its own, such as choking the sale of ‘rare earth’ chemical to the US and stopping the purchase of soyabeans and other farm items. These steps hit especially the farmers in the US Midwest very hard. Chinese firms have also reduced prices of some manufactured goods for exports, making them more competitive.
Recent stats show that the losses in the US-China trade war have not all gone China’s way. US exports of soyabeans and food items to China have dropped from the $20-26 billion to only about $9 billion, a fall of around 75%. Farmers in states like Minnesota and Illinois report a straight income loss of around 25%. However, the US government has taken steps to make up for between $12 to $16 billion through various measures, but it stretches the government’s own finances. There is a good reason for China to target farms in Midwest US, as these areas are known to be President Donald Trump’s stronghold.
But what has pleased President Trump and US policymakers is that US companies have managed to account for $14 billion worth of new trade and business, directly replacing sales and supplies of all kinds of items from China.
As for other countries benefiting from the trade war, Taiwan has exported $4.2 billion worth of items like office equipment and accessories to the US, while Mexico, with an export figure of $3.5 billion, came next, selling more agri-foods, transport equipment, and electrical items. The EU countries increased their US exports by $2.7 billion.
After Taiwan, Vietnam was the big winner in South east Asia, exporting $2.6 billion of furniture and commodities to the US.
Countries like South Korea, Canada and India came next, exporting between $1.5 to $0.9 billion to the American market. African countries did not fare very well.
The stats had been collected over the six month period beginning January 2019. UN analysts felt that while there were some ‘third party gains’ through other countries increasing their trade with the US, American consumers themselves lost out more, as they paid higher prices for certain items. For the US administration, there was also the worrying factor of farmers’ discontent to reckon with.
