While U.S. stocks are trading higher this morning, trade tensions with China remain a concern for world financial markets. And there are further complications in the Asia Pacific.
Much of Asia is watching the U.S.-China trade dispute with a view reminiscent of an African proverb: “When elephants fight, the grass gets trampled.”
These days, several economies in the Asia Pacific might be feeling like the grass.
One concern mentioned by the Korea International Trade Association is a fall in demand for what are called “intermediate goods” from China. Those are products that start in China, and then go elsewhere for value-added components, often before being exported to a third destination.
Sometimes the intermediate goods come to the United States, and American companies, which now face added costs.
Popular regional intermediate destinations include South Korea, Japan, and Hong Kong.
Hong Kong’s Secretary for Commerce and Economic Development says that last year, 7% of the city’s exports to the U.S. were products that started in China.
South Korean financial authorities held an emergency meeting Monday on the latest twists of the U.S. China trade flap, and their impact on South Korea.
The head of the Japan Automobile Manufacturers Association said Monday that there are “too many uncertainties” in the global economy — in part because of the escalating trade dispute between the U-S and China.
Economists caution disruption in bilateral trade will likely interfere with regional trade, and ultimately produce an uncertain cost to the international economy.