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Indonesia’s opportunities amid US-China trade war
The trade war between the world’s two biggest economies is almost entering its second year, but there seems to be no resolution. The Group of 20 Summit in June in Japan could not reduce the tensions of the trade war.
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The trade war between the world’s two biggest economies is almost entering its second year, but there seems to be no resolution. The Group of 20 Summit in June in Japan could not reduce the tensions of the trade war. (AFP/Alain Jocard/Christof Stache)
O
ne of United States President Donald Trump’s policy pillars is implementing policy that promotes free, fair and reciprocal trade relations. It was one of Trump’s commitments during the presidential election campaign in 2016 to restrict imports by increasing tariffs to reduce worsening trade deficits, particularly with China.
The trade war between the world’s two biggest economies is almost entering its second year, but there seems to be no resolution. The Group of 20 Summit in June in Japan could not reduce the tensions of the trade war.
In fact, the US-China trade war is into a hotter round as the US has in place an additional tariff of 15 percent on about 3,200 imported Chinese goods worth US$110 billion as of September.
The US government is also ready to take steps to increase tariffs on 555 other Chinese goods, including smartphones, in December. China immediately responded by raising additional tariffs of 5 percent and 10 percent on 1,717 American goods worth $75 billion.
In the long-running US-China trade war, Japanese investment bank Nomura predicts that Vietnam will be the biggest winner because many US companies import basic and auxiliary materials to avoid high tariffs.
Vietnam’s export volume increased 40 percent in the first quarter of 2019. The contribution of exports to gross domestic product (GDP) of Vietnam has increased to 7.9 percent.
Vietnam could reap big profits as its export goods are similar to those of China. Geographically, Vietnam is also located near China, and some products from China are relabeled in Vietnam to easily penetrate the US market.
