International Finance

Vietnam gains 7.9% of GDP as a result of US-China trade war

US-China trade war, Vietnam, Chile, Taiwan
The other big winners from the trade war are Taiwan, Chile, Malaysia, and Argentina

Vietnam, Taiwan, and Chile have emerged as the winners as a result of the Trump trade war, media reports said. Of the three countries, Vietnam is found to benefit the most from the trade dispute, according to economists at Japanese financial company Nomura. Vietnam gained 7.9 percent of its GDP as a result of its increased exports to China and the US due to the trade war. The other big winners from the trade war are Taiwan, Chile, Malaysia, and Argentina.

The economists observed an increase in Vietnam’s GDP because importers in the US and China source goods from the country in an effort to dodge the punitive tariffs. 

“Some exporters in the US and China may be willing to absorb part of the additional tariff costs in their profit margins, and some multinationals could opt to re-shore production, but the trade literature shows that, over time, the largest response is likely to be trade diversion,” the economists said.

Several US importers have sought Asian countries in an effort to dodge the tariffs, while simultaneously the Chinese have sourced goods from North and South America. The US tariffs on Chinese goods have encouraged importers to mainly look for electronic products from other countries. That is followed by furniture and travel goods. Likewise, China’s import substitution mostly includes soybeans, aircraft, grains, and cotton, according to the report.

The economists said that the substitution effect may be small on third countries with smaller economies — but the benefit they achieve from the trade diversion represents a significant boost to their exports. That said, the European countries have received marginal benefits from the trade diversion.

However, economists have said that their findings might not indicate the overall economic impact of the trade war. “This is only one aspect of the trade war. There are many other forces at work and the overall economic impact on most third countries will be negative,” the report said.

What's New

IF Insights: The effects of the global cost of living crisis

IFM Correspondent

Here is what BOJ has to say on Yen’s impact on Japan economy

IFM Correspondent

Global unemployment expected to dip in 2024: ILO study

IFM Correspondent

Leave a Comment

* By using this form you agree with the storage and handling of your data by this website.