Tokyo:

Some Asian countries stand to gain if US President-elect Donald Trump follows through on his promises of massive tariffs on China and triggers a new wave of factory relocations to the rest of the region.

But a trade war between the world’s largest economies would also destabilize markets around the world, with Asia – which contributes the largest share of global growth – being hardest hit.

Trump, who won a landslide presidential victory this week, pledged during his campaign to impose 60 percent tariffs on all Chinese goods entering the United States in an effort to balance trade between the two countries.

Analysts, however, question whether the new president will stick to such a high figure and dispute the blow these tariffs could inflict on the Chinese economy, estimating that GDP could be reduced by between 0.7 and 1.6 percent.

The cooling effect would also ripple across Southeast Asia, where production chains are closely linked to China and benefit from significant investment from Beijing.

“Lower U.S. demand for Chinese goods due to higher tariffs on China will result in lower demand for ASEAN exports, even if the U.S. does not impose tariffs on China. tariffs directly on these economies,” said Adam Ahmad Samdin of Oxford Economics.

Indonesia is particularly exposed due to its high exports of nickel and minerals, but China is also the main trading partner of Japan, Taiwan and South Korea.

Besides China, Donald Trump has also warned of a 10-20% increase in tariffs on all imports, as part of his protectionist policies and his fixation on other countries taking advantage of states. -United.

“The magnitude of these effects likely depends on each economy’s direct exposure to the United States,” said Samdin, who added that the United States accounts for 39.1 percent of Cambodia’s exports, 27.4 percent from Vietnam, 17 percent from Thailand and 27.4 percent from Thailand. 15.4 percent from the Philippines.

India, target?

Trump first imposed high tariffs on China in 2018, during his first administration, leading to the emergence of “connector countries,” through which Chinese companies funneled their products to avoid taxes American.

These countries could now be in the crosshairs.

“Vietnam’s electronics exports to the United States could also be targeted by Trump, in a bid to stop the diversion of Chinese electronics to the United States via Vietnam since 2018,” said Lloyd Chan, senior analyst at MUFG, Japan’s largest bank.

“This is not inconceivable. Commercial rewiring has notably gained ground in the region’s electronics value chain.”

“India could itself become the target of protectionist measures from the United States due to the large share of Chinese components in Indian products,” added Alexandra Hermann, economist at Oxford Economics.

Trump could also impose higher tariffs on Indian products in sectors such as “automotives, textiles, pharmaceuticals and wine, which could make Indian exports less competitive in the United States,” it said. said Ajay Srivastava of the New Delhi-based Global Trade Research Initiative.

A trade war would be dangerous for India, said Ajay Sahai, director of the Federation of Indian Export Organizations.

“Trump is a transactional person. He can target higher tariffs on certain Indian export products so that he can negotiate lower tariffs on American products in India,” he told the AFP.

Supply chain reorganization

In the medium term, these negative effects could be offset by the establishment of factories outside China to escape the fallout.

The “China+1” strategy initiated under Donald Trump’s first term led to a shift in production to India, Malaysia, Thailand and Vietnam.

Thanks to its geographical position and its qualified and cheap labor force, Vietnam is already one of the main beneficiaries.

The country has notably received investments from Taiwanese Apple subcontractors Foxconn and Pegatron and South Korean Samsung, thus becoming the world’s second largest exporter of smartphones behind China.

“It is increasingly likely that more companies will want… to have a second or third production base outside of China,” said Bruno Jaspaert, president of the European Chamber of Commerce at Vietnam.

Chinese companies themselves are investing heavily, from Vietnam to Indonesia, in sectors such as solar power, batteries, electric vehicles and minerals.

“American businesses and investors are very interested in opportunities in Vietnam and this will continue under the new Trump administration,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi.

But whether low-end or high-tech production, China’s competitive advantage in price, scale and quality is difficult to replicate, warns Nomura Bank.

A reorganization of production chains could lead to a “loss of efficiency” and an increase in prices, “with a negative impact on global growth”, Thomas Helbling, deputy director of the IMF for Asia, recently explained to AFP.

Asian countries could therefore gain export market share but ultimately see their situation deteriorate in a context of weakening global demand.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)