There are no winners in a trade war. China's East Asian neighbors, Japan and the Republic of Korea, are assessing the impact of the trade dispute between the United States and China on their economies.
A statement released by the ROK's Trade Ministry on July 12 said the escalating trade row could hit the country's exports of intermediary goods used in home appliances, computers and communications devices.
The ministry said it would prepare a response to cope with the economic impact of the trade dispute, faced with the prospect of a prolonged and expanding trade war.
In a meeting with trade experts in Seoul on July 16, ROK Trade Minister Kim Hyun-chong said the escalating trade tension between the world's largest and second-largest economies will inevitably affect the country's export-driven economy, Yonhap News Agency reported.
Kim called for ROK companies to explore ways to develop or combine advanced technologies to create innovative products and services immune to anti-dumping duties to better prepare for the possibility of a full, drawn-out trade war between the U.S. and China.
Both the U.S. and China are major trading partners with the ROK, Asia's fourth-largest economy. In March, the ROK signed a deal with the U.S. to revise their bilateral trade agreement, and it has been exempted from the global steel tariffs imposed by the Trump administration, Instead, the ROK's exports of steel to the U.S. have been cut by 30 percent.
Kim believes that a retreat from free trade is expected to create a systemic crisis for economies that depend on foreign trade, describing the mounting U.S.-China trade tension and U.S. investigation into automobile imports as "game changers" in global trade.
Concerns are rising in the ROK that its economy could be among the losers of a protracted trade war between the U.S. and China after Washington this month unveiled an additional list of tariffs on $200 billion worth of Chinese goods.
This action came just days after the White House levied punitive duties on $34 billion worth of Chinese products, and China vowed to retaliate with equivalent tariffs on U.S. goods.
While Seoul earlier played down the initial tariffs' direct impact on the ROK's economy, the expanded list has unnerved exporters, as memory chips, autos, computers and electronic parts have all been targeted, Yonhap News Agency reported.
In May, the U.S. Department of Commerce launched a national security investigation into imports of autos and automotive parts, which could lead to new tariffs being imposed on some of Japan's major exports to the U.S..
The Trump administration's new tariff policies are expected to devastate global supply chains.
Japanese companies are considering adjusting the supply of parts and raising the prices of their products, the Nikkei Shimbun newspaper reported.
Many Japanese companies are bracing for possible fallout from the ongoing U.S.-China friction over a slew of trade issues, with no immediate prospects of ironing out their differences, according to a survey of 100 major companies by the Asahi Shimbun newspaper.
U.S. Trade Representative Robert Lighthizer and Japan's Economy Minister Toshimitsu Motegi will have their first trade talks conducted under a new framework later this month after U.S. President Trump withdrew the U.S. from the Trans-Pacific Partnership agreement.
Analysts say the new framework could put Japan under direct U.S. pressure to enter talks for a bilateral free trade agreement, which Tokyo has tried hard to avoid.
Japan is wary of entering such talks, as they would put it under pressure to open up politically sensitive markets such as agriculture.
A quarterly survey last month by Nikkei and the Japan Center for Economic Research showed that economists and analysts in Indonesia, Malaysia, the Philippines, Singapore, Thailand and India had increasing concerns over rising protectionism coupled with worsening U.S.-China trade relations.
Rising protectionism was seen as the biggest risk in Malaysia, Singapore and Thailand, according to the survey.
