China trade war: United Nations warns of 'massive' impact of tariff hike

China trade war: United Nations warns of 'massive' impact of tariff hike

Japan and Canada will see exports increase by more than Dollars 20 billion each, it said.

American firms would capture only six percent of about $250bn of the affected Chinese exports, while Chinese companies would retain 12 percent, despite the higher cost of trade, the study said.

The UN predicted the European Union stood to gain $70 billion as both China and the USA seek new outlets for their exports, and up to $90 billion in additional trade due to larger value chain changes in East Asia.

Going ahead with auto tariffs opposed by USA car-makers such as General Motors Co. and foreign firms like BMW AG and Volkswagen AG that have plants in the U.S.

While not yet ratified, Trump said it would "positively impact the lives of countless workers, business owners, farmers, and the families and the communities they support", as well as offering protections for intellectual property, labour and the environment.

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Specifically, the legislation would give the President more authority to increase tariffs if other countries' tariff and non-tariff barriers are too restrictive.

Australia, Brazil, India, Philippines, Pakistan and would also notice "substantial effects relative to the size of their exports", it said. "The US economy continues to perform extremely well" amid signs of "a slowdown in Europe and other parts of the world", he added. The tariffs on $250bn worth of United States imports from China are adding dollars to the government's coffers - however this money is not being paid by China, but rather is paid by hard working American families.

"Our analysis shows that while bilateral tariffs are not very effective in protecting domestic firms, they are very valid instruments to limit trade from the targeted country", Pamela Coke-Hamilton, head of UNCTAD's global trade division, said in a statement. But because the magnitude and duration of tariffs is unclear, Brazilian producers have been reluctant to make investment decisions that may turn out to be unprofitable if the tariffs are revoked. As protectionist policies generally hurt weaker countries the most, a well-functioning multilateral trading system able to defuse protectionist impulses and maintain market access for poorer countries is of fundamental importance.

The study also said that positive effect for some countries will likely be outweighed by the negative global effects. Trade tensions, Unctad said, could "spiral into currency wars".

China's tariffs on United States exports will give benefits mostly to non-Chinese firms and the same will be case vis-à-vis U.S. tariffs on China's exports. Tariff increases penalize not only the assembler of a product, but also suppliers along the chain. USA firms would capture just around 6% of the $250bn of Chinese exports subject to U.S. tariffs, while Chinese firms would retain about 12%. The additional tariffs on US$200bn worth of Chinese goods have risen by 10% - with a further hike to 25% in the pipeline. The date of March 1 will mark the end of the 90 day trade war armistice agreed to at the G20 Summit in Argentina on December 1, 2018.

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