Global trade can shrink 3% because of the rates charged by us: UN Economists
Global trade can shrink three percent and exports can see shifts from markets such as the US and China to India, Canada and Brazil because of the tariffs charged by the US, said a UN Top economist.
US President Donald Trump launched a large tariff plan last week. The White House then announced a 90 day pause on a reciprocal rate for most countries except China, which in turn decided to charge a 125 percent rate on US imports.
Global trade can shrink by 3 percent, with significant long-term changes in trade patterns and economic integration, “said Executive Director of the International Trade Center Pamela Coke-Hamilton in Geneva on Friday.
“For example, exports from Mexicowhich have been greatly affected by shifting from markets such as the US, China, Europe and even other Latin American countries, with simple benefits in Canada and Brazil, and at a lower level, India, he said.
Likewise, Vietnamese exports lead to the US, Mexico and China, while increasing substantially to the Middle Eastern and North African markets (Mena), the European Union, Korea and others, he said.
Quoting examples of clothing, Coke-Hamilton said that textiles are the top industry in terms of economic and work activities for developing countries.
In this context, he said that Bangladesh, the second largest clothing exporter in the world, would face a 37 percent reciprocal tariff, if it came into force, which could cause a loss of USD 3.3 billion in annual exports to the US in 2029.
He added that the important part of the solution for developing countries to navigate any global shocks is pandemic, climate disasters or sudden changes in policies in prioritizing three fields, additional values, and regional integration.
So there are opportunities for developing countries not only to navigate the time of uncertainty, but to prepare proactively for the long term, he said.
Coke-Hamilton said that the initial estimate, developed with the French Economic Research Institute Cepii, was calculated before the 90-day pause announcement and additional tariff increases in China, showed that in 2040, the effect of what was called the reciprocal and initial countermeasures could reduce global GDP with 0.7 per cent.
Countries such as Mexico, China and Thailand but also countries in South Africa among the most affected, with the United States themselves.
On China’s decision to impose a 125 percent tariff at US imports, Vice President and Director of the Asia Society Institute (ASPI), Washington DC Wendy Cutler said that with China’s announcement about further tariff increases on US imports, it was clear that the hope that China would be flickering in this trade war.
China in the long run. Beijing also acknowledged that he had reached the end point in replying with the tariff, it might indicate that he had many other tools in the weapons that could be further activated if the US responded today with additional steps, he said.
He added that the steep tariffs that are now in place of 1345 percent for Chinese imports to the US and 125 percent for US imports to Chinavirtually stop all trading of goods between the two largest economies in the world.
How long this tariff is still there is an open question, but at a certain point, both Washington and Beijing will recognize the need to be involved again and manage this deteriorating situation, he said.
ASPI Vice President regarding international security and diplomacy Daniel Russel said that Chinese President Xi Jinping did not retreat, but he also did not blow up everything.
He bet that Trump’s tantrums will collapse under the burden of the US market response, said Russel.
He added that Beijing shifted from symmetrical retaliation rates, indicating that it was done playing Trump’s escalation game and instead of playing for long -term strategic advantages.
By stating that it would ignore ‘the future of the US tariff surge, Beijing did not try to win the trade warit which was trying longer than that and to defeat Trump. Beijing’s goal is to protect its economy, expand diplomatic influences, and continue to suppress US allies to protect value. The Southeast Asian tour XI is part of a strategy to sustain the Chinese economic bond in the region while Washington attacks and alienates its partners, said Russel.
Source: PTI
