Fri, Jul 12, 2019 - Page 12 News List

US tariffs on China benefit Taiwan and others: PwC

By Crystal Hsu  /  Staff reporter

Washington’s tariff hikes on Chinese goods have benefitted other Asian economies, including Taiwan, boosting their exports to the US, international accounting firm PricewaterhouseCoopers (PwC) said yesterday.

US imports from China fell about 15 percent year-on-year in the first quarter of this year, according to PwC’s global economy report.

The decline — in the wake of punitive tariffs to address trade imbalances — has led to a global slowdown in merchandise trade and manufacturing sectors, the report said.

However, it also has created opportunities for other regional trading partners, as imports to the US from Taiwan, Bangladesh, India, Indonesia, Malaysia, South Korea, Thailand and Vietnam grew by more than 16 percent, it said.

“Economics can sometimes lag behind politics, but we are now seeing hard economic data of the impact of US-China tensions,” PwC UK senior economist Mike Jakeman said.

Taiwanese exports to the US gained 17.4 percent from a year earlier to a record US$222.05 billion in the first six months, driven mainly by electronics used in computers, the Ministry of Finance said on Monday.

If the trend continues, the change will contribute to faster economic growth in Taiwan, Vietnam and South Korea in particular, Jakeman said.

The US now accounts for 13.9 percent of Taiwan’s outbound shipments, the highest in 13 years, while China is losing importance as the “world’s factory,” the ministry said.

However, tariff exchanges would prove unsuccessful in tackling trade imbalances, Jakeman said.

“If your goal is to remedy trade imbalances, bilateral tariffs are an imperfect tool, because import substitution can recreate the problem elsewhere,” he said.

As a result, Vietnam is growing more competitive than China as evidenced by the increase in the US’s trade deficit with Vietnam, which was US$13.5 billion in the first quarter, up from US$9.3 billion a year earlier, he said.

Trade tensions also have a negative effect on business sentiment and demand for exports, he said.

“Certainly, the outlook for the world’s biggest economies is less bright than it was 18 months ago,” Jakeman said.

Each of the crucial markets — the US, China and the eurozone — might see slower economic growth, although the US benefited from a one-off tax cut last year, he said.

China continues to temper its economy, while the eurozone is correcting after above-trend growth in 2016 and 2017, he said.

That these three economies have cooled simultaneously has been alarming, although their fundamentals remain strong, he added.

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