The trade dispute between the United States and China continues to affect the global market. But it is important to note that it has varying impacts on different countries.
According to Steve Cochrane, chief Asia Pacific economist at Moody’s Analytics, countries that depend on exports will take the biggest hit of slowing global trade. Cochrane specifically mentioned Japan, South Korea, and Taiwan as these Asian countries are highly reliant to the Chinese economy.
The above-mentioned countries are too dependent on China for growth. This is because they supply products to factories in China and sell to markets such as the U.S. These 3 countries also serve a great number of Chinese consumers, according to Cochrane who made the comments on CNBC’s “Squawk Box” on Tuesday.
The U.S.-China trade war started last year. Just when experts believed that the world’s two largest economies could strike a deal in March, it took a surprising turn when U.S. President Donal Trump tweeted that he would increase tariffs on Chinese goods. China then hit back at the U.S. with new import tariffs. Trump’s decision to restrict U.S. companies to do business with Chinese tech giant Huawei also made the situation worse.
Japan, South Korea, and Taiwan join the list of biggest losers in the Asian region because of slowing global trade caused by the trade tension. These countries largely rely on exporting tech components to China. Market analysts believed that the 3 countries’ road to recovery will depend on the U.S.-China trade deal’s development in the coming weeks. All eyes are on the upcoming G-20. After the event, it is believed that President Trump will make a decision on whether to impose additional tariffs on Chinese goods.
Since May, stock exchanges in the said countries have suffered significant losses, forcing foreign investors to sell. John Woods, Asia Pacific chief investment officer at Credit Suisse, told CNBC that unless that there’s a positive resolution to the trade dispute, Japan, South Korea, and Taiwan are “probably an area to avoid”.