SA exports could benefit from US-China trade war

South African exports to the United States could increase by more than 2% if the tit for tat trade war between the US and China continues, according to a new study by the United Nations Conference on Trade and Development (Unctad). The study estimates that of the US$250 billion in Chinese exports subject to US tariffs about 82% will be captured by firms in other countries, about 12% will be retained by Chinese firms, and only about 6% captured by US firms. Similarly, of the approximately $85 billion in US exports subject to China’s tariffs, about 85% will be captured by firms in other countries. US firms will retain less than 10%, while Chinese firms will capture only about 5%, according to the Key Statistics and Trends in
 Trade Policy 2018 study. The results are consistent across different sectors.  “The effect of US-China tariffs would be mainly distortionary. US-China bilateral trade will decline and be replaced by trade originating in other countries,” says head of the Unctad trade division, Pamela Coke-Hamilton. The study found that European Union exporters have the most to gain – $70 billion of
US-China bilateral trade ($50 billion of Chinese exports to the US, and $20 billion of US exports to China). However, global trade is expected to be further distorted by the imposition of antidumping legislation. One example is the tariffs on steel and aluminium products that the United States imposed in March 2018. To limit the possibility of dumping, several economies, including the European Union, India, Canada, Turkey and South Africa have all initiated investigations within the World Trade Organisation framework to implement temporary tariffs, according to the report. Shipping and logistics chains could be affected by shifts in the international production networks if the tariffs become entrenched. An example cited by the study would be the relocation of Chinese assembly lines from China to Mexico. This would have a domino effect in the region. The high volume  of Chinese exports affected by US tariffs is likely to  hit East Asian value chains the hardest, with Unctad estimating that they could contract by about $160 billion.