Baku, Azerbaijan, July 8
By Leman Zeynalova – Trend:
US-China tariff hikes could take extra 0.2-0.3 percentage points out of global growth in 2019, Alexander Apokin, Energy Economics Analyst at Gas Exporting Countries Forum (GECF) told Trend.
He noted that the long and tedious process of US-China trade talks has not moved forward much in Osaka, despite the easing tensions.
“There is already a 25 percent tariff on $200 billion worth of Chinese goods from the US (29 percent of US imports as of 2018). And the Chinese have retaliated with tariff rates of 20-25 percent on $60 billion worth of US exports. US liquified natural gas (LNG) is targeted with a 25 percent tariff rate,” noted Apokin.
The expert pointed out that although the direct Trump-Xi talks have avoided a new escalation, an agreement is a long way from being reached.
“Optimism fades as rhetoric intensifies. The latest round of tariff hikes in May exacerbated cyclical threats to economic growth in 2019-2020, and could take an extra 0.2-0.3 percentage points out of global growth in 2019 alone,” he added.
As for the international impact of this trade war, Apokin said that after five quarters of tariff hikes, there is already a toll on international trade and global economic activity.
“In 2018, Chinese exports to the US went down by 27 percent. On top of that, exports to Japan declined 16 percent and exports to South Korea went down 18 percent. The global trade volume in 2018 also slowed down to 4.1 percent from 5.5 percent in the previous year, reflecting in part the global supply chain effects from the US tariffs against China and other countries,” added the expert.
He went on to add that economic activity in China and the US is already slowing down, albeit the exact role of tariffs already imposed and ongoing trade tensions into that is unclear.
“Industrial production in China since 2017 stays at decade lows below 6 percent year-on-year, and started to decline further to 5 percent in May. In the US, industrial production is slowing down to below 2 percent as compared to 3.9 percent in 2018, despite robust GDP growth in Q1,” noted Apokin.
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