As Washington and Beijing are having tariffs war, there is a growing concern about the consequences these duties will have on emerging-market economies and currencies.
These tensions are reaching new peaks as China is threatening new tarrifs on US products. However no tariffs have been put in effect yet.
Emerging countries like Mexico, Taiwan, South Korea, South Africa, Malaysia, Singapore, and many more will face a cut to their growth because of these duties. Mexican export goods go overwhelmingly to the U.S. This means that significant trade barriers could bear more macro-downside risk than for other emerging nations, but for the time bieng both Mexico and Canada are exempt from new tariffs. Other nations like South Africa will face a cut to its growth because the international market is shrinking. In addition, countries with no exposure to the US market will also be affected. Asian countries like Taiwan, Malaysia and others are vulnerable because of China. The tariffs war domino-effect will ripple through countries and sectors. A sector that can be highly hurt is mining, which means countries like Indonesia and Russia will be hurt by Chinese Tariffs. The global economy is facing a problem that will slow down it’s growth. The tariffs that are proposed by the US are bieng faced by retaliatory action not only by China but by other countries as well. Canada announced today that they are making new tariffs saying “we will not back down.” The EU tariff’s on €2.8 billion US goods (like whiskey, orange juice, and motorcycles) were in retaliation for the tariffs on European automobiles. This lead Harley Davidson to move some production outside the US.
The domino effect is also reaching the stock markets throughout Asia and the US.