See More on Facebook

Economics, News

What impact could a US-China trade war have on Southeast Asia?

After many twists, turns and threats, the first shots of a United States-China trade war have been fired.


Written by

Updated: July 14, 2018

Tariffs on $34 billion in Chinese imports officially came into effect last Friday and China responded with tariffs of the same value on US goods, The Straits Times reported.

While experts have said that the initial tariffs are unlikely to do significant damage, a full-blown, prolonged trade war could harm both countries – and the global economy.

Here is how a trade war could impact four countries across Southeast Asia, and how some of them are gearing up to combat the threat.

Singapore

Singapore has been identified as one of the Asean members likely to suffer the most from a trade war. OCBC economists have warned that an all-out trade war between the world’s two largest economies could reduce the city state’s GDP by 0.3 percentage points this year, The Straits Times reported. As an export-heavy nation, Singapore is especially vulnerable to the effects of a trade war, which will be felt most in export-dependent sectors like transportation and storage, wholesale and retail, Channel News Asia reported, quoting Oxford Economics’ lead Asia economist Sian Fenner.

DBS chief economist Taimur Bag also pointed out that trade openness and exposure to the electronics supply chain means that there will be no respite for Singapore or neighbouring Malaysia.

Malaysia

Located just across the border from Singapore, Malaysia is another Asean nation that is expected to suffer in the event of a major trade war. China is Malaysia’s biggest trading partner, and the economy, once heavily dependent on exports of crude and palm oil now derives more than $341 billion from its sale of electronics and machinery and its parts to China, according to Forbes.

Thailand

Thailand stands to be hit directly as well as indirectly, having been slapped with tariffs on washing machines, solar cells, steel and aluminium products, The Nation reported.

Tisco Economic Strategy Unit (ESU) has analysed the potential impact of both the direct tariff as well as the effect of the US-China battle and has concluded that the impact is quite limited, as the four products subjected to the US tariffs only made up $885 million or 0.37 per cent of Thailand’s exports last year.

They are also optimistic that the indirect effect of the trade war will be mild. The list of goods hit by the first $50 billion will affect the country’s exports of machinery, plastics, vehicles and parts – products Thailand exported for a total of 8.8 billion last year. An estimate of the amount of products re-exported by China to the US suggests that only $590 million or 0.25 per cent of Thailand’s total exports will be affected.

Indonesia

The US is a key market for Indonesian exports, with knitted apparel, woven apparel, rubber, electrical machinery, footwear, fish and seafood being the country’s seven top exports to the US, The Jakarta Post said in an editorial. A trade war would hurt the country’s exports both directly and indirectly.

The Indonesian government plans to introduce measures to minimize the potential risks posed by a trade war, including strengthening local industries, curbing raw material import demands by developing basic industries, and boosting tourism by encouraging budget airlines to expand and renovate airports across the archipelago, The Straits Times reported.



Enjoyed this story? Share it.


Nadia Chevroulet
About the Author: Nadia is an Associate Editor at Asia News Network.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Economics, News

Cooperating on energy in face of tariffs

At Houston oil and gas industry forum, US, China executives discuss future. The US energy industry expects a strong long-term energy relationship with China, a US energy official told US and Chinese oil and gas executives the day after China announced a retaliatory 10 per cent tariff on US natural gas. Steve Winberg, US Energy Department assistant secretary for fossil energy, on Wednesday assured the energy executives that the US has never revoked a liquefied natural gas (LNG) export authorization, nor plans to do so. “Some potential exporters and financiers have expressed concern that the US may rescind or revoke LNG export authorization. Let me be very clear that these concerns are unfounded,” Winberg said on Wednesday at the opening of the two-day 18th US-China Oil and Gas Industry Forum in Houston. The forum has been a collaboration of the US Energy Department, Ch


By Cod Satrusayang
September 25, 2018

Economics, News

Swift assistance needed to rehabilitate Hokkaido’s quake-stricken industries

To realize Hokkaido’s post-quake rehabilitation, it is indispensable to rebuild its industries. A half month has passed since the Hokkaido earthquake, which registered the highest level on the Japanese seismic intensity scale of 7. A power blackout that spread to all parts of the prefecture has been resolved. The No. 1 unit at the Tomato-Atsuma thermal power plant — a facility that plays a central role in the supply of electricity there — has been brought back on line. The government has withdrawn its request for power-saving, and neon lighting has returned to flourishing areas in Sapporo. However, scars from the earthquake have not yet healed. Even if the amount of direct damage, including that caused to roads, rivers and forest land, is calculated alone, the figure exceeds ¥150 billion. There are still many disaster victims in evacuation centers. T


By The Japan News
September 25, 2018

Economics, News

Disruption seen from auto parts duty in US-China trade war

US tariffs on Chinese auto parts will probably result in higher prices and could disrupt the global automotive supply chain industry. The Trump administration has imposed a new 10 percent tariff on $200 billion worth of Chinese goods that takes effect on Sept 24. Beginning on Jan 1, the tariffs will increase to 25 percent. China retaliated with $60 billion of new tariffs on US products. The new levies target more than 100 automotive products including engines, gaskets, rubber seals, tires and transmission shafts. Tariffs are basically taxes on the consumer, and all costs increases within the supply chain will eventually be passed along to the consumer, according to Peter Nagle, senior automotive analyst at IHS Markit. “In the short-term, suppliers might absorb some of the cost of the tariff but eventually they will have to raise prices or resource product from elsewhere, which also will rai


By China Daily
September 24, 2018

Economics, News

India launches world’s biggest healthcare programme

Prime Minister Narendra Modi launched India’s ambitious healthcare program on Sunday. Deemed the “world’s largest government-funded healthcare programme”, the scheme will cover half a billion people through its network of hospitals and support services. Speaking at the event, the PM said that the number of beneficiaries is equivalent to the total population of the United States, Canada and Mexico or the entire European Union. “This is a major step taken to fulfil the vision of providing better healthcare facilities to the poorest of the poor and to those standing last in the queue,” the PM said. Following the launch, the PM informed the gathering that the scheme covers diseases such as cancer, heart diseases, kidney and liver problems, diabetes and over 1300 various ailments. “The treatment of the diseases can not only be done in government hospitals but also private hospitals,” said


By Cod Satrusayang
September 24, 2018

Economics, News

US exempts Korean steel from import tariff

The move is seen as a positive signal for the local steel industry. Steel products made by South Korea’s SL Tech has been excluded from the US’ steel tariffs, marking the first case of exemption since the US imposed a quota on Korean steel shipments this May, industry sources said Thursday. The US Commerce Department earlier this week accepted US medical device manufacturer Micro Stamping’s request for a tariff exemption on ultrafine steel tubes imported from Korean steel company SL Tech. Micro Stamping uses ultrafine steel tubes made by SL Tech to produce medical equipment. Korean steelmakers viewed the decision as a positive sign of a higher possibility of tariff exemptions, while remaining cautious over whether the same decision would be applied to steel products used for construction and household appliances.


By The Korea Herald
September 21, 2018

Economics, News

China hits back with tariffs on US$60b of US goods in trade war

China has hit back with reciprocal tariffs after President Trump imposed tariffs on over $200 billion of Chinese goods. China will impose tariffs on US$60 billion (S$82.3 billion) worth of US goods as retaliati


By The Straits Times
September 19, 2018