The Sino-US trade war affects Malaysia, South Korea, Brazil and Taiwan

The trump administration's tariff policy on China has led to a new round of trade wars between China and the U.S.

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As an important member of the world trade, China's trade policy with the United States has also affected many other countries.

“The effects of a full-scale U.S.-China commercial slugfest would be global,” says Scott Kennedy, deputy director of the Freeman Chair in China Studies with the think tank Center for Strategic & International Studies. “Companies the world over are embedded in supply chains that run through China.”

Malaysia

This Southeast Asian country has historically depended on exports of crude and palm oil. But the $341 billion economy rests now as well on exports of electronics, machinery and their parts to both China as well as the United States. Malaysia’s top export to both last year was electronics circuits and parts, according to data compiled by Moody’s. Those goods risk impacts from Sino-U.S. trade restrictions, says Joy Rankothge, a senior Moody’s analyst in credit strategy and research. Presumably Chinese or American firms would reduce orders or ask for price cuts.

South Korea

The value of Korean semiconductors shipped to China would fall by $4 billion per year if Sino-U.S. tariffs kicked in, this news report suggests, citing estimates from the Korean research organization Institute for International Trade. Memory chip makers Samsung Electronics and SK Hynix might suffer the same way, the report says. “If protectionist measures were to significantly and durably weigh on global trade...trade-reliant economies like Taiwan, Korea or Malaysia would be affected,” says Marie Diron, managing director of the Sovereign Risk Group at Moody's.

Brazil

A trade war might generate excess product capacity and inventories in China as well as the United States. Producers from either country would look for other places to “dump” their goods, says Stuart Orr, professor of strategic management at Deakin University in Australia. Soy beans are one such product. If they flooded the world market, other countries that already sell it for global consumption would face sudden competition, Orr says. The most likely third country: Brazil. The South American nation produces 30% of global supplies, second only after the United States. China is in fourth place.

Taiwan

Taiwanese manufacturers ship tech hardware parts to China for final assembly – or do the assembly there for re-export. Solid-state drive manufacturers such as Lite-On and PC monitor builders including Foxconn Technology (Hon Hai Precision) would pay more to ship into the United States due to their production bases in China and are mentioned on Washington's list of tariffs, says Sagitta Pan, senior industry analyst with the Market Intelligence & Consulting Institute in Taipei. But drive makers can transfer assembly and production lines back to Taiwan, Pan says, while monitor builders could shift production to third countries.

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WTO panel rules that certain Brazil high-tech goods' programs violate trade rules

A number of Brazil's programs to promote domestic production of its high-tech goods and automobiles contain provisions that violate WTO rules, a World Trade Organization dispute panel said Wednesday.

The parties have 30 days to appeal the decision and Brazil must act in terms of the panel ruling within 90 days. "Otherwise, Brazil will be expected to remove its illegal tax program without delay," said the EU trade mission in a statement after the panel announced its decision.

The complaints concern a wide range of industrial stimulus programs that Japan and the European Union complained about as unfair competition.

The WTO panel said the unfair measures include tax breaks, regulatory discrimination, and local content requirements that are inconsistent with the General Agreement on Tariffs and Trade (GATT), the WTO's Agreement on Trade-Related Investment Measure (TRIMs Agreement).

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They also include the Agreement on Subsidies and Countervailing Measures (SCM Agreement).

A further two additional programs were found to provide illegal export subsidies in violation of the SCM Agreement.

In December 2013, the EU and then in July 2015 Japan initiated WTO dispute proceedings against Brazil, targeting seven that include more than 90 legal instruments under those programs which they charged were inconsistent with WTO rules.

Panels were established in December 2014 for the EU and in September 2015 for Japan. Both panels were staffed by the same three panelists and the chair of the panels later informed WTO members that the two disputes would follow a harmonized procedure.

The EU trade mission statement described the dispute as one of most comprehensive disputes ever launched by the EU as it noted that the dispute panel found that numerous Brazilian tax programs are illegal under WTO rules.

The ruling states that the program discriminate against EU automotive, ICT and electronic products and grant prohibited import and export subsidies to Brazilian companies.

The dispute also covered fiscal incentives contingent on Brazilian firms meeting certain export performance requirements.

The EU said Brazil is an important trade partner for the European Union.

Since mid-2012, the EU has enjoyed a trade surplus with Brazil, which can be linked to the decrease in world commodity prices.

EU exports to Brazil reached their peak in 2013 but have recently declined due to the economic slowdown in Brazil, the weakening of the real, and the Brazilians' increasing use of restrictive trade policies.

The value of exports of goods to Brazil in 2013 was close to 40 billion euros (48 million U.S. dollars).

In 2016, the value of exports was close to 31 billion euros (37 billion U.S. dollars).

The EU said transport equipment, machinery and appliances constitute the bulk of EU exports to Brazil. However, the EU said the discriminatory taxes and other barriers undermine trade prospects.

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