Vietnam, Taiwan, Chile gain most from trade war: Nomura

14 Jun '19

2 min read

While Vietnam, Taiwan and Chile are the biggest beneficiaries of the US-China trade war, Bangladesh is yet to gain anything notable, according to Nomura, a Japanese financial services group. US and Chinese importers have been importing fewer goods from each other, especially those subject to higher levies, and sourcing many from alternative locations.

Vietnam has so far emerged as the largest beneficiary of that diversion in trade flows, gaining an estimated 7.9 per cent of its gross domestic product (GDP) from the new business, followed by Taiwan (2.1 per cent of GDP), Chile (1.5 per cent), Malaysia (1.3 per cent) and Argentina (1.2 per cent), Bangladesh media reported citing the study by Nomura economists.

For India, the benefit was marked at 0.2 per cent of GDP in 2019. The other major beneficiaries from the trade war are Taiwan, Chile, Malaysia and Argentina, the bank said.

Bangladeshi analysts feel their country was omitted from the list of beneficiaries as US and Chinese products hit by the trade war did not cover readymade garments, jute products and footwear.

While the study showed third-party economies can benefit from the US-China tensions by becoming substitute sources for goods subject to elevated tariffs, Nomura economists cautioned that the findings don’t paint the full picture of the trade war.

There are many other forces at work and the overall economic impact on most third countries will be negative, they said.

The detrimental effects may include companies holding back investment plans due to uncertainties on trade, and falling demand in the United States and China because companies and consumers in both countries end up facing higher costs due to the tariffs. (DS)

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