Not Everyone Loses in a Trade War

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A tit for tat on trade tariffs last week between the US and China may have been the start of a trade war between the superpowers. While there may never be any clear winner – there rarely is in such things – some unexpected players may benefit in the long wrong, as this interesting piece from Bloomberg explains.

Not Everyone Loses in a Trade War
Hostilities could accelerate the flight of factories to the rest of Asia.
Bloomberg: March 26, 2018

Economists like to say that no one wins in a trade war. We may soon find out if they’re right. Only hours after U.S. President Donald Trump said he would slap tariffs on a range of Chinese products, China imposed punitive duties on some imports from the U.S. in retaliation for previously announced U.S. tariffs on steel and aluminum. And here we go, down the rabbit hole.

Companies, workers and consumers from both countries are almost certain to get hurt in a tit-for-tat conflict. On the other hand, the carnage could produce big winners elsewhere in the developing world.

On the surface, a disruption of trade might seem a disaster for other countries in Asia. A blow to Chinese exports could ripple through the supply chains that stretch across the region, robbing other economies of growth opportunities and jobs.

At the same time, a U.S.-China trade war will spill over into another ongoing economic battle — the one between China and its low-wage competitors in global export markets. For many emerging economies, the long-term benefits might well outweigh the short-term damage. Read More

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