There are many counties in Asia that have seen their economic positions expand in the past 30 years on the back of exports to the US and China, so this current trade war that has heated up will have negative impact both directly and indirectly on three major economies – Japan, South Korea and Taiwan. In addition to selling goods to China, these countries supply products to Chinese factories, giving them several ways to enjoy economic growth from China GDP expansion.
The slowdown in global trade is already impacting these export-reliant economies, according to an article in CNBC which quotes Steve Cochrane, Chief Asia Pacific economist at Moodys. Mr Cochrane explained that these three economies supply products to China that are assembled and shipped on to the US and other markets. Trade, as we all now is complex and happens on many levels given the fact that a car for example, will have parts made in 10 different countries allowing it to be assembled in China, Japan or the US – and supply chains for parts are long and complex.
“They depend very highly on trade linkages with China, and are very tightly tied to both domestic demand in China an in terms of the broader supply chains. So they are very, very highly exposed,” Cochrane told CNBC in an interview. These three counties will be the top market losers as this trade war ramps up. On a positive note, Mr Trump will meet Mr Xi next week in Osaka Japan at the G20.