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28 Jun 2019

International Economy

G20 Summit: Hopes to End Trade War May Fade Away (Business Brief No.3004)

       ​       All eyes are on the G20 Summit, in particular a talk between the US and China, the world's superpowers, to end the trade war that will last for a year in July 2019. Looking back, it is believed that the US and China knew that they would not benefit from the persistent trade war. A clear consequence of their trade dispute is now seen in rising prices of their imported products and this has hurt their consumers and manufacturers. The stances of the US and Chinese leaders in ending the trade war are based on political benefits and their popularity at home.

            Due to the duties that the US and Chinese leaders have to shoulder, we at KResearch are of the view that the current G20 Summit will present more challenges for them to find a balance in order to immediately end the trade dispute and allow them to delay trade retaliations. Although they know that they will eventually be undermined by increased trade pressure, the delay in their trade negotiations will prompt President Trump, as the leader of the US, to gradually impose tariffs on Chinese imports worth another USD325 billion during the remainder of 2019 like it did with Chinese imports worth USD200 billion.

                The impact of the US-China trade war on Thai exports to China and ASEAN countries is projected at approximately USD2.1-3.1 billion and the figure may reach the upper range of the forecast if the US begins imposing 25 percent tariffs on the remaining USD325 billion worth of Chinese imports during the second half of 2019. In addition, there is an indirect impact, which is not included in the projection, i.e., the slowing global economy that will likely pressure purchasing power in other export markets of Thailand and this will further undermine our export performance overall in 2020.