A warning issued by a trade official of the UN has spelled out doom for global economy in case the US plans of raising tariff on goods of Chinese make go through in the next month. The implications have been forecasted to be “massive”. The move is expected to come into play in case the trade deal between the two countries fails to reach a consensus by 1st March.
This comment was preceded by a report from a trade agency of the UN whose subject matter was the US-China trade war’s impact. According to reports, the protectionism is expected to hit the Asian countries the most. The logjam between the two economic giants has leaded both sides to levy heavy tariffs on the other one’s good worth millions of dollars.
The new tariffs were mutually held off in December, to give a window for dialogue between US and China. If the deadline of 1st March is not met with a solution, US have threatened to increase rate of tariff rates on Chinese goods worth $200bn to 25% from the existing rate of 10%.
The international trades head at the UNCTAD, Pamela Coke-Hamilton has already warned of massive negative implications on the entire global system of trading and the smaller countries would find it difficult to adjust to the external shocks. As per Ms. Coke-Hamilton, there can be devaluation as well as currency wars, accompanied by stagflation that can cause job losses and widespread unemployment.
Escalating costs of trade between US and China would push companies out of the existing supply chains of Asia. However, it’s highly unlikely of the US firms to pick up those companies. Studies indicate that merely 6% of Chinese exports worth $250 billion are expected to be picked up US firms. European countries as well as the likes of Japan, Mexico, Canada, India, Australia, Brazil and Vietnam stand to benefit from the chain of events.