China trade war a boon for Europe, UN study says

Irving Hamilton
February 7, 2019

"The US economy continues to perform extremely well" amid signs of "a slowdown in Europe and other parts of the world", he added. "But it must include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs", he also said.

New tariffs could kick in on 1 March when a 90-day trade war truce ends.

China's Commerce Ministry said the US Trade Representative's report was contrary to the facts and based on US domestic laws, Chinese state media reported. But I don't blame China for taking advantage of us.

The study also underlines that while some countries will see a surge in their exports, negative global effects are likely to dominate.

"The implications are going to be massive", Pamela Coke-Hamilton, head of worldwide trade at the UN Conference on Trade and Development, told a news conference on Monday.

Smaller and poorer countries would struggle to cope with such external shocks, she said.

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According to the UNCTAD report, East Asian producers will be hit the hardest, with a projected $160 billion contraction in the region's exports. But it warns the effects could be felt everywhere. The White House said in a statement that the sides made progress but much work remained to be done. Those duties, coupled with tariffs in place and retaliation by other countries, would lead to the loss of nearly a million American jobs and cost the average family of four $767 a year, according to the study. In a news conference, Coke-Hamilton quoted former U.S. Secretary of State Cordell Hull, who compared protective tariffs to "a gun that recoils on ourselves". "As long as the Democrats bring this to the floor, I think we're highly confident this will be passed".

They also found that 10 percent tariffs on a further $200 billion in imports that took effect in late September had less of an impact and had led to a well-documented pre-tariff surge in imports as companies sought to get ahead of the tariffs.

Next, Ms. Coke-Hamilton said, there would be "increased pressure on global growth, as companies will have to impose adjustment costs which will affect productivity investment and profitability". For example, the approximately $27 billion of US-China trade that would be captured by Mexico represents a non-negligible share of Mexico's total exports (about 6%). Japan, Mexico and Canada could grab over $20bn.

The study estimated that out of the $250 billion in Chinese exports subject to US tariffs, some 80 percent would be captured by firms in other countries, while 12 percent would be retained by Chinese firms and only six percent would be captured by USA firms.

The president also renewed his often-repeated falsehood that China was paying the United States import duties on its exports. An economic downturn often accompanies disturbances in commodity prices, financial markets and currencies, all which will have important repercussions for developing countries.

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