EFFECTS OF US CHINA TRADE WAR

By early July 2018, there were negative and positive results already showing up in
the economy as a result of the tariffs, with a number of industries showing
employment growth while others were planning on layoffs. Regional commentators
noted that consumer products were the most likely to be affected by the tariffs. A
timeline of when costs would rise was uncertain as companies had to figure out if
they could sustain a tariff hike without passing on the costs to consumers.

American farmers were particularly hard-hit by China's retaliatory trade actions.

According to the American Farm Bureau, agricultural exports from the US to China
decreased from $24 billion in 2014 to $9.1 billion in 2018. Yet despite the negative
effects, polls in July 2019 showed that most farmers continued to support Trump, as
78% of them said they believed the trade war will ultimately benefit U.S. agriculture.

To alleviate the difficulties faced by farmers, the Trump administration allocated $28
billion in relief, mostly in direct payments, in two tranches through July 2019. Trump
stated that he would spend the tens of billions of dollars in tariffs from China to buy
products from "Great Patriot Farmers" and distribute the food to starving people in
nations around the world. According to an August 2019 USDA report, as American
wheat exports "plunged", Canadian wheat exports "rocketed" from 32% to more than
60% of Chinese wheat imports during the most recent marketing year.

Analysis conducted by the Peterson Institute for International Economics found that
China imposed uniform tariffs averaging 8% on all its importers in January 2018,
before the trade war began. By June 2019, tariffs on American imports had
increased to 20.7%, while tariffs on other nations declined to 6.7%. ] The analysis
also found that average American tariffs on Chinese goods increased from 3.1% in
2017 to 24.3% by August 2019.

Economic growth has slowed worldwide amid the trade war. The IMF’s World
Economic Outlook report released in April 2019 lowered the global economic growth
forecast for 2019 from 3.6% expected in 2018 to 3.3%, and said that economic and
trade frictions may further curb global economic growth and continue weaken the
investment.

Analysis conducted by Moody's Analytics estimated that through August 2019

300,000 American jobs had either been lost or not created due to the trade war,
especially affecting manufacturing, warehousing, distribution and retail.
By September 2019, American manufacturers were reducing their capital
investments and delaying hiring due to uncertainty caused by the trade war.
STOCK MARKET
Uncertainty due to the trade war has caused turbulence in the stock market with
investors "rattled" by the conflict.
On December 4, 2018, the Dow Jones Industrial Average logged its worst day in
nearly a month as it declined nearly 600 points, to which some argue is in part due to
the trade war.
On August 14, 2019 the Dow dropped 800 points, partly caused by increasing trade
tensions between the U.S. and China.Nine days later, on August 23, the Dow
dropped 223 points in five minutes after Trump "hereby ordered" American
companies to immediately seek alternatives to doing business in China; and the Dow
was down 623 points for the day.

Other countries
The trade war has hurt the European economy, particularly Germany, even though
trade relations between Germany and China and between Germany and the U.S.
remain good. The Canadian economy has seen negative effects as well. Like the
U.S., Britain, Germany, Japan, and South Korea were all showing "a weak
manufacturing performance" as of 2019. Several Asian governments have
instituted stimulus measures to address damage from the trade war, though
economists said this may not be effective.
Some countries have benefited economically from the trade war, at least in some
sectors, due to increasing exports to the United States and China to fill the gaps left
by decreasing trade between these two economies. Beneficiaries
include Vietnam, Chile, Malaysia, and Argentina. Vietnam is the biggest beneficiary,
with technology companies moving manufacturing there. South Korea has also
benefited from increased electronics exports, Malaysia from semiconductor exports,
Mexico from motor vehicles, and Brazil from soybeans.

India
India’s exports to China have grown much faster than to US post the trade war
between the two largest economies, State Bank of IndiaNSE 10.09 % said on
Monday.

While overall exports to US grew by 9.46% to $52.4 billion in FY19, for China the
growth was 25.6% to $16.7 billion. Citing the example of textile imports of US, which
have shifted from China towards other countries in South Asia, the bank said that
though India has gained in the first five months of 2019, but Vietnam and
Bangladesh have witnessed much larger increase in exports to USA.

Alternatively, cotton imports from USA to China have declined for the first half of
2019 and imports from other countries including Brazil, Australia and India have
increased.