trade how humans and even some animals
have exchanged goods and services for
millennia
but a trade war now that's a more recent
development
so you want a trade dispute escalates
into a militarized conflict like the
opium wars of the mid-1800s
that's a trade war what's been happening
between the u.s and china
is fortunately not that
which is not to say that the
consequences of it so far have not been
profound
china will lose one percent uh
equivalent to gdp
and u.s side slightly smaller than
one percent point these two countries
are the
biggest losers from the varatro to
attention
but when two global superpowers face off
like this
it's never just about them we're
interested in understanding the dispute
in broader terms
and figuring out if both china and the
us are losing
who's winning and what does it all mean
for the future of global trade in a
post-pandemic world
if we're looking at action and not
bravado most agree the trade dispute
kicked off
on july 6 2018 the u.s imposed a 25
tariff on 34 billion dollars worth of
chinese imports
china reacted and kind on the very same
day
this tit for tat repeated again the
following month
but come september china was not keeping
up
over the course of the next year the us
would raise tariffs
and china would not retaliate
and then in september of 2019 a
de-escalation had begun
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they want to make it feel frankly they
want to make a deal a lot more than i do
by february of 2020 the murky phase one
agreement went into effect
we know it kept in place the tariffs on
imports from china
which were still more than six times
higher than before the dispute began
china also committed to buying an
additional 200 billion dollars worth of
u.s
exports targets that would be pretty
much impossible to meet
this is where things stood until the
covet 19 pandemic happened
and changed everything around a quarter
of all u.s
imports came from china before the
dispute began
that's as much as number two and number
three import partners
mexico and canada combined
while the share of chinese imports
dropped during the dispute
kovit brought chinese imports back up to
practically pre-tariff levels
this has everything to do with the types
of goods that became necessary during
the pandemic
like ppe and home office equipment
for example the category of textiles
that includes face masks
has risen tenfold since the beginning of
2020.
but with chinese products becoming more
expensive overall
what occurred pre-covered is actually
still playing out
and is something economists call trade
redirection
ipads and iphones and gadgets now are
produced
by using a very complicated
tightly connected interconnected supply
chain network
so now chinese products and exports to
the u.s
say uh smartphone export decline but
demand in
u.s markets still exist so those
other countries in asia who can produce
a smartphone
and also explore to the us market this
is what we call a trade reduction effect
so which countries have benefited the
most from trade redirection
pre-covet mexico which boosted its
status as one of the us's biggest
trading partners over the course of the
dispute
but after nosedive canada too
but some countries have been able to
hold on to their winnings even during
the crisis
and they are malaysia taiwan
vietnam and south korea end of that
group
the country who got the biggest jolt to
its gdp was vietnam
vietnam was really well positioned for
this moment not only is it china's
neighbor but it was already a leading
manufacturer
making shoes and sportswear for nike and
adidas since the 90s
and as the chief source of phones for
the world's largest phone producer
samsung just take a look at the change
in vietnam's u.s
imports between 2017 and 2019
compared to china
cell phones and computers furniture
clothing and shoes
there's been an enormous shift in demand
one that has not gone unnoticed
the last six months in the acceleration
i would say it's about two to three
times more than the last 24 months so
you know the trade challenge just you
know give people
more motivations to do it faster versus
you know conservatively
but vietnam's success derives not only
from its expansion as an exporter to the
u.s
but also as a recipient of something
called foreign direct investment
particularly from chinese companies
looking to
dodge the tariffs
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so where do things go from here is
vietnam truly a cinderella story
in a globalized economy it's just never
that simple
this is only a partial impact so
china u.s retention may fuel
global economy and trade slowing down
and that overall global economy slowing
down is a bad news
for even countries like vietnam although
smaller and late-comer economies like
those in the asia-pacific region
are making gains trade disputes like
this one
are just bad business
you