Scenarios, Situations and Strategies of the US-China Trade War − this is what a roomful of distinguished panellists and concerned individuals discussed over an ISAS-ATC-WEF panel discussion.
The trade war has impacted some of Singapore’s workers already, with IBM shutting down its Tampines plant and other parts of the electronic sector being affected by an uncertain business outlook.
Hence this panel provided a useful deeper context of the trade war, with a short summary below:
1. Don’t mistake this trade war (based on economic supremacy) for a cold war (based on ideology). In the Cold War, the US and USSR economies were basically divorced. However, we now have tight economic links at all levels, which are risk of detaching due to tariffs being thrown around.
2. The higher tariffs are just the first wave, there will be more to come (e.g. impacting people, technologies etc). In fact, the Global Future Council on International Trade and Investment has published a paper detailing four scenarios for the Future of Trade and Investment.
3. China and US are more insulated against their own trade war than smaller economies as they both have relatively large domestic markets.
4. One possibility to end the trade war is to restart trade talks, but since it seems like both sides think they’re going to win, this is a remote possibility.
5. In the short term, damage may be high for a trade-dependent economy like Singapore, especially if we sell components to China to assemble and ship to US market.
6. Although it seems there are more anti-trade movements, there are quite a few other issues thrown into the big bucket such as immigration, technological disruption, fear of etc etc.
7. There are limitations of redistribution policies to offset inequalities created by trade, but then there was never the promise that trade would benefit everyone equally although the aggregate would go up.
8. The trend is towards trading services rather than physical assets.
9. If trade is bad, what alternative is better in improving our jobs and livelihoods? Do the anti-trade agitators have a response to this question?
10. Support for trade has never been higher in the US. People are starting the recognize the damage being done by declining trade (especially when their back-to-school and Xmas shopping suddenly becomes more expensive).
11. For countries to survive this trade war, you need to get your domestic affairs in order. For example, you cannot have backward policies in digital or ecommerce, hiring and firing staff, omnichannel retail etc if you want to attract incoming investment.
12. Sadly it seems that retaliatory unilateralism is becoming a trend now, as the US is already doing it, and India just retaliated too with tariffs, which may not be the most sensible idea as the amount/benefits in question is not big enough to give a decent upside.
13. There seems to be a twisted narrative that because the US and other countries have been taking retaliatory unilateral action, my country can also do it. And tariffs are good (for protectionism of my economy) right?
14. Is there a silver lining to this trade war? Yes there is, as for a long time, people have been taking trade for granted. The trade war has been making people (even taxi drivers) figure out how to make trade again.
Information on the panel:
Dr Duvvuri Subbarao, Distinguished Visiting Research Fellow, ISAS-NUS; and Former Governor of the Reserve Bank of India
Dr Amitendu Palit, Senior Research Fellow; and Research Lead (Trade and Economics), Institute of South Asian Studies, NUS
Dr Deborah Elms, Founder and Executive Director, Asian Trade Centre
Dr Raymon Krishnan, Director of Corporate Advisory, Asian Trade Centre
Ms Kimberley Botwright, Policy Analyst, Digital Trade, International Trade & Investment, World Economic Forum