The ongoing dispute between the two powerhouses of the world has caused more than just waves in their respective economies. As a result of the trade diversions set out by the US, the EU, Taiwan, Mexico and Vietnam have now picked up parts of this trade. Lucrative as it has been for them and the benefits they have seen from the unfolding situation between the US and China, these disputes are seen by many as the beginning of a complete breakdown of the countries relations.
The impact of coronavirus
While COVID-19 may have had a further impact on their ever dwindling friendship, the countries that are benefitting the most are subsequently those who managed to contain the virus outbreak early. Taiwan for example, have managed to do just that, meaning the demand for its technology industry have continued to grow. The Taiwan currency has become the best-performing emerging-market currency in the world in the past few months.
The US “will likely continue to elevate the treatment of Taiwan in certain ways,” said Susan Shirk, chair of the University of California San Diego School of Global Policy and Strategy’s 21st Century China Center. “They have already been doing it bit-by-bit. This is highly provocative to Beijing.”
Other industries in the firing line
It’s not just countries that are caught up with the ongoing trade war, businesses are too. Tech giant Apple has very much felt the impact. Shares in their suppliers in Asia took a hit last year and in Japan, component supplier Murata Manufacturing saw its stock drop 1.62% and South Korea’s LG Display fell by 5.56%. As Apple assembles all its iPhones and other products in China, it leaves itself at risk of being impacted by any tariffs placed on Chinese exports. Will Apple make the move to source some of its parts from the countries that are benefitting from these trade disputes?
While all this is rumbling away in the background, many businesses can benefit from keeping an eye on the trade, stock and forex markets. These fiery relationships can lead to all-time lows and all-time highs for many. With the right tools and software in place, it’s easy to track and keep an eye on the trading landscape, giving businesses the opportunity to maximise on the current climate.
Where can we expect these relationships to head?
With the coronavirus pandemic leaving many economies in dire need of help, neither the US nor China can afford the damage of another full-blown trade war would cause. The timing of this trade tension could not be worse, with tens of millions of jobs already lost and businesses in financial ruin, the threat of higher tariffs from the US imposed on China could cause an all out technology cold war. Disrupting technology and trade investment – what could have been the engine for recovery in many economies in 2020.
If tensions continue to escalate, the ongoing dispute could weaken the world’s recovery from COVID-19 and risk slowing important technology innovations. Another trade war would have a huge toll on businesses and consumers, with American businesses already forced to pay $3.9 billion in tariffs in March 2020 alone. Can the two countries come to an agreement, or will the economy suffer more than it already is?