Losers and winners of Sino–US trade war

Soybean futures dropped 2.3 percent and hit their lowest price in a year as farmers prepared for disruption to the $12 billion worth of soybean shipments they send to China annually. Corn and wheat futures each fell less than 0.5 percent. (Filepic shows soybean harvest)

KUALA LUMPUR: The losers in the “tit-for-tat” US-China trade war will be the Asian export economies, according to AmInvestment Research. 

The research house said on Thursday it feel that Asian economies engaged in intermediary trading between China and the US will bear the brunt of the impact ofthe trade dispute. 

"Key countries will be South Korea, Taiwan, Vietnam and Malaysia, all of which export goods such as machine parts and components for communications equipment used in the production of items that China then sells to the US.

"Chip makers in South Korea, Japan, Taiwan could all lose out if the trade war results in Beijing changing its semiconductor suppliers. Mainland Chinese companies currently import about US$200bil worth of microchips a year, most of them from South Korea, Japan and Taiwan. 

"If Beijing decides to make concessions with the US i.e. China to reduce its trade surplus with the US by US$100bil, it could do so by boosting its purchases of US chips,'' it noted.
 
Japan is at risk, being one of the world’s largest exporters. Japan exports almost US$700bil worth of goods in 2017 with China and the US being their top trading partners. Its major exports are cars, computers and electrical equipment, as well as iron and steel, all have been in the crosshair amid the China-US tensions.

Hong Kong is another economy at risk as it is a gateway for much of the trade that flows between mainland China and the US.

Meanwhile, AmInvestment added that the winners in the US-Sino trade war will be the soybean exporters, pork and plane suppliers, steel importers.

China is the world’s largest buyer of soybeans, importing 60% of the traded crop, which it uses primarily for animal feed.

With China’s new 25% tariffs on US soybeans, the single most valuable exporter to China worth US$14bil annually, it will be a boon for other exporters of the grains like Brazil and Argentina given that the US soybeans will now become more expensive. 

Russia might also be able to make up some of the shortfall in supply of soybeans.

China’s efforts to hit back at US pork products – with the US$3bil worth of tariffs – is expected to bode well for alternative suppliers, like Germany, Spain and Denmark. Russian pork producers might also benefit from a slump in sales of US meat.

Other companies might benefit if China decides to buy European-made Airbus aircraft instead of Boeing planes from the
US, it noted.

The tariffs imposed by the US on steel and aluminium imports could benefit other buyers of the metal, including the Philippines. 

As China sought to divert its supply to other markets, it could be expected to trim its margins. There might be some excess supply or glut that can bring down prices of steel products, the research house said.