Countries making "intermediate goods" like Taiwan, South Korea and South-East Asian nations are the hardest hit. Experts note that the trade war is having ripple effects across the region. Local currencies fall. After Turkey India announces duties on US food imports worth US$ 240 million.
Beijing (AsiaNews/Agencies) – The trade war between Beijing and Washington, which includes duties on goods, could sink the economies of Asia, especially those of Taiwan, South Korea and South-East Asia.
According to experts, these countries are among the largest exporters of "intermediate goods" to China, which are assembled into finished products sold in the United States.
Any reduction in Chinese exports to the US, as a direct consequence of the punitive tariffs in place between the two countries, would end up also undermining those economies closely tied by the same supply chains.
This would have a domino effect that would drag down the continent, delivering a very hard blow to the growth prospects of many emerging nations.
Examples of "intermediate goods" include semiconductor chips and screens. Those components are typically manufactured in different locations across Asia before they are sent to China for assembly into products such as mobile phones and computers.
While the final list of affected goods is not yet known, J.P. Morgan analysts wrote in a note that electronic products would likely be included.
"By its very nature, such products are highly reliant on tightly integrated supply chains. To that extent, this would propagate any trade shock into the region," the J.P. Morgan analysts said.
Such threats are coming at a time when emerging markets, including those in Asia, have been battered by capital outflows and have seen their currencies weaken in the process.
By the end of Tuesday, the Taiwanese dollar was down by around 1.7 per cent since the start of the year, whilst the Korean won weakened 4.2 per cent in the same period. Singapore's currency dipped by 1.5 per cent and the Thai baht lost only 0.6 per cent.
All these currencies hit heir lowest point since the start of the year as a direct consequence of the tension between the world’s two main economies and trading nations.
However, until the targeted goods are known, it's difficult to quantify the actual impact that Asian economies could see, experts said. In fact, the damage could also be smaller than expected to suppliers because of demand from China’s domestic market.
Finally, India joined Turkey to impose retaliatory tariffs worth of millions of dollars on goods imported from the United States.
In New Delhi, officials announced yesterday that US$ 240m worth of duties on American food products. The tariffs are expected to take effect on 4 August.
Meanwhile, many fear that the trade war will continue in the coming weeks with further unilateral protectionist measures.