President Trump has announced a new round of trade tariffs against China. The 10% charge on another 300-billion dollars of Chinese goods will go into effect next month. It’s another escalation of trade tensions between the United States and China, but what’s the impact on the rest of Asia?
Few economies in the world are as dependent on trade as Singapore. The Southeast Asian city is a point of commerce connection, and often an indicator of the broader health of global trade and economic growth.
The recent news has been grim on both fronts: Singapore’s exports have fallen for two months in a row. Economic growth figures out earlier this month show a fall of nearly 3.5% last quarter compared to the one before. That’s a steep decline, and it comes as other regional economies are also suffering. Indonesian exports tumbled by 9% in June compared to a year earlier.
In Northeast Asia, exports from Japan are down by nearly 7%, and down almost twice as sharply in South Korea.
For all four of those countries, China is the largest export market.
In each case, many of those exports go to China as so-called “intermediate goods” – components that go into products assembled in China and then sent on to the United States — often by U-S companies.
A number of U.S. firms are moving production out of China, but few are bringing it back to the United States. Instead, manufacturing is shifting to countries from Vietnam and Bangladesh to India and Mexico.
According to the consulting firm AT Kearny, U.S. companies moving out of China are primarily moving to other parts of Asia — in particular to markets where labor is cheap and readily available.