Asian economies under threat due to U.S.-China trade war

Market - Mohit Shah - Jun 21,2018

Rating -

stars - based on 21 reviews

asian economies under threat due to us china trade war

As per economists, Asian economies including Taiwan, Southeast Asia, and South Korea could be majorly impacted if trade rigidities between China and U.S. further worsen.

If in case a trade war initiates between the United States and China, the industrial supply chain active in the Asia-Pacific region is anticipated to experience a major impact. This simmering friction among the two leading economies is expected to affect Taiwan, Southeast Asia and South Korea quite significantly.

According to senior Asia economist at Capital Economics, Gareth Leather, these economies are known to be the largest exporters to China concerned with intermediate goods, which are later assembled into finished products and shipped to final destinations including the U.S.

 In the recent past, both the U.S. and China have been indulged in posing threats to implement tariffs on the products manufactured by each other. However, the final list of goods affected has not been revealed.

Looking at the current scenario, if the various tariffs recommended by U.S. President Donald Trump are brought into effect, then it will result in reduced Chinese exports to the United States. This will directly offer a heavy knock to the supply chain in Asia.

These threats are circulating at a time when evolving markets, comprising those in Asia, have been battered by capital outflows and also facing weakened currencies during the process.

It was analyzed that on Tuesday various Asian currencies such as Taiwanese dollar and Korean won hit their feeblest levels in several months as compared to the U.S. dollar; it is a clear sign of the U.S.-China trade war.

As per experts, until the targeted goods are spotted, it's not possible to quantify the definite impact on the Asian economies. Furthermore, according to Leather, the damage might end up being smaller since China is placed as the dominant supplier of numerous goods which are sold to the U.S.