Asian Economies and the Trade War
The growing tension in the tariff war between the U.S. and China is causing disruptions in multiple segments of Asian economies that are dependent on imports and exports to/from China. In the short run, multiple Asian economies will suffer disruptions in the technology and automobile sector; and these disruptions will mainly result in decreasing terms of trade for smaller Asian nations. However, more economies will benefit in the long run due to the sector migration of productive resources and domestic labor pools.
This article primarily studies complex, unfinished goods that are exported from China to other nations before being finished and imported to the U.S., where they will be taxed by the additional tariffs. In the short run, these unfinished goods will be exported from China at a premium in order to recover the taxes that will later be applied upon their importation to the U.S. These premiums will increase prices of the goods in the intermediate shipping nations, which will increase the prices to U.S. consumers. These premium prices will also decrease the profit margins and revenue streams of the domestic industries within smaller Asian nations in the short run. However, these premium prices will encourage smaller nations to adapt their economies by mobilizing resources and labor pools to different sectors, which would increase the output and productive capabilities of smaller nations. By augmenting and reorganizing their productive capabilities, these smaller nations may benefit in the long run by increasing their international presence and utilization of domestic production.
The growing tensions caused by tariffs and counter tariffs between the U.S. and China have created panic in international markets. The short run disruptions caused by these tariffs will cause profit and revenue reductions in smaller nations that import unfinished goods from China and export finished products to China for export to the U.S. However, in the long run, the smaller nations may benefit from increased production and trade stemming from relocating their productive resources and labor pools to more profitable, alternative sectors of their economies.
https://www.cnbc.com/2018/11/08/us-china-trade-war-countries-in-asia-that-will-be-winners-or-losers.html?recirc=taboolainternal
The tariffs between America and China have much more significant impact on the WTP of certain affected products. This would generate a bigger profit in the short run, but in the long run it will cause less exports to enter the US because of the higher costs to the consumer and the producers. However, nations which are emerging into the world market would increase their production levels because they will be able to under cut the labour market and produce the products at a lower cost. This would involve the producer outsourcing their production to these newer emerging countries which will try and keep the production costs down to a reasonable level.
ReplyDeleteI like that this article regarding the trade war between the US and China, in contrast to others discussed on the blog, mainly looks at the effects of the tariffs on multiple Asian countries rather than looking more at the effects on the US or just China. With the tariffs on China, in the long run production of these goods will shift to other Asian countries who have the means to produce these goods and ultimately these countries stand to gain from these tariffs, like Gradin said. While there are possible gains in the long run for these Asian countries, in the short run, Asian countries will be hurt by these tariffs. The US also stands to gain from these tariffs in increased tax revenue and because of increases in the world price because of the tariff, shifts to domestic production.
ReplyDeleteI agree with both Erin and Lewis that there is a larger impact on those other Asian nations' terms of trade. We are looking more into how this effects their economy by the U.S. and China's trade war overlapping with their production. And the ultimate goal for these smaller countries is to get some of the revenue in the long run but run into problems in the short-run like Gradin mentioned.
ReplyDelete