Trump’s trade war knocking at 2018’s door: Difficult year tipped

HONG KONG – The French bank and investment group Natixis is tipping a difficult year ahead for Asia-US trade relations. It says challenges against Chinese as well as Asian exports have only started, and if US trade action on washing machines and solar panels  is acquiesced or even agreed, more hurdles are expected to come.

US President Trump has approved recommendations to impose safeguard tariffs on imported residential washing machines and solar panel cells and modules, measures which Natixis says should not come at a surprise as the US Administration officially opposed China’s bid for recognition as a “market economy” in the World Trade Organisation right after Trump’s visit to China.

“The announced tariffs only focus on two products,” Natixis says.

“The unbiased attitude with no targetted country, at least on paper, seems to suggest that the US is willing to defend domestic industries no matter where the source of threat may originate.

“Nevertheless, China is a natural target given its large market share for most exports and, certainly white goods and solar panels.”

Natixis says the sum of solar panels and washing machines only accounts for a small proportion of Chinese exports, but it is hard to argue that China – as well as other Asian manufacturing exporters – will not be harmed by these measures.

“One way out, at least on paper, would be for the WTO to respond to the US proposal.

“Still, the threat of the US abandoning the WTO does not put the institution in a very comfortable position to address concerns from China or other Asian producers.

“Beyond the potential extension of US tariffs to other import goods, a soft response – or silence from the WTO – could open the door to other major economies following the US in their quest for a “supposedly’ fairer trade relation with China and other Asian countries.”  www.natixis.com (ATI).