Chinese exporters start to take trade war hit – but US consumers also hurting, UN study shows
- After almost a year of Donald Trump’s tariffs, Chinese companies have been forced to lower the price of their exports to the US
- Taiwan the most successful in filling the gap for American buyers, research shows
Chinese companies have started to absorb the cost of US tariffs, cutting prices on exports to the United States about a year into the trade war, according to a new study.
The research, by the United Nations Conference on Trade and Development (Unctad), indicates that Chinese exporters held off on price cuts until the second quarter of this year, when they reduced prices of tariff-hit goods to the US by an average of 8 per cent.
In addition to greater desperation among Chinese companies to cling to market share, the research suggests that, until those cuts, the costs of US President Donald Trump’s tariffs were being passed onto the US consumer, the other big loser of the trade war.
The report also highlighted a 65 per cent drop – a loss of almost US$10 billion – in US imports of Chinese office machinery in the first half of 2019.
US buyers found alternatives for 45 per cent of that shortfall, with Taiwan being the major beneficiary, but the US$5.5 billion in lost trade suggests that these goods are not always easily replaced.
Overall, American buyers found replacements for about two-thirds of the US$35 billion in lost US imports from mainland China, with Taiwan often the new supplier of choice, followed by Mexico, the European Union, Vietnam and Japan.
But the gap points to full warehouses in the US due to frantic bursts of front-loading, lower demand in the US and the failure of any economy – or combination of economies – to replace China’s giant export engine.
