Tuesday, January 24, 2017

Southeast Asia: Impact of a Trump Trade War with China

Background Briefing:
Southeast Asia: Impact of a Trump
Trade War with China
Carlyle A. Thayer
January 23, 2017
[client name deleted]
Q1.How would Southeast Asia be effected by a trade war between the U.S. and China?
ANSWER: A trade war between the United States and China would likely begin by
President Trump imposing higher tariffs on goods imported from China, thus
provoking Chinese retaliation. A trade war would slow growth in both countries and
negatively affect already low global growth. Countries in Southeast Asia that export
components and raw materials would suffer as the Chinese market contracted
because of a downturn in exports to the United States. As the impact of the trade war
spread globally all economies would suffer.
Q2. Who would suffer the most? Governments as a whole, those involved in
manufacturing, etc?
ANSWER: Obviously both American and Chinese companies that export to each other
would be the first victims. Companies in Southeast Asia that export component parts
(IT-related) for assembly in China would be hurt by the downturn in Chinese exports.
As Chinese growth slowed, companies that export raw materials would also see their
export volumes decline. China would still be able to export consumer and other goods
to Southeast Asia. Government’s whose industries and companies are affected would
suffer a decline in revenue and possibly social unrest.
Q3. How likely do you see this scenario playing out under the Trump administration?
ANSWER: Donald Trump’s threat to raise tariffs on Chinese goods would face legal
challenges taken by China in the World Trade Organization. Once Trump’s Cabinet is
formed he is likely to face advice putting constraints on his impulse to lash out at
China. It is more likely that the U.S. and China will work out a modus vivendi that sees
more U.S. companies gaining market access to China.
Suggested citation: Carlyle A. Thayer, “Southeast Asia: Impact of a Trump Trade War
with China,” Thayer Consultancy Background Brief, January 23, 2017. All background
briefs are posted on Scribd.com (search for Thayer). To remove yourself from the
mailing list type, UNSUBSCRIBE in the Subject heading and hit the Reply key.
Thayer Consultancy
ABN # 65 648 097 123
Thayer Consultancy provides political analysis of current regional security issues and
other research support to selected clients. Thayer Consultancy was officially
registered as a small business in Australia in 2002.

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