China-US trade war started since the beginning of 2018. It began when Trump, US current president, increased the price of foreign goods to encourage local customers to buy local products. As the US biggest trading partner, China got hit worst. In June 2019 China retaliated by increasing tariffs on $60 billion worth of US goods. The increasing tariffs between those two have continued ever since.
The war puts Emerging Market into a dangerous position. They rely on thriving world trade to stimulate their economic growth by exporting raw products to China and providing a market for China products. The China-US trade war decreased imports demanded by China and affected China’s products sold in Emerging Market.
The example of immediate impact from the trade tension is 7 percent decline in exports from South Korea. Many Asia countries considers as Emerging Market. They are India, Indonesia, Malaysia, Pakistan, Taiwan, The Philippines, and Thailand. Thus, the war affects Asia economy.
What G20 summits brought?
G20 summits happened previous week, blew fresh air for the China–US trade war. This summits allowed Trump and Xi Jinping, China current president, to meet and discuss. The two did meet and discuss. The meeting was possible because of the opportunity and the G20 leader’s pressure for them. As mentioned in the New York Times, Mr. Trump stopped imposing new tariffs on Chinese products. Similarly, China also agreed to resume its imports on the US’s farm and other products. Besides, China and the US also agreed on continuing their trade talks. Trump, surprisingly, also backtrack the ban on sales of American equipment to Huawei, a Chinese telecom giant.
This temporary timeout and trade talks on the trading could bring light for the markets affected by the war. This positive gesture from both countries can normalize the import demand from China and the prices of China’s products.