Economies that depend on supply chains including China would also suffer. Many South Korean and Japanese firms export parts and components to China, where they are combined with China-made parts and components, and possibly assembled into final products, for export to the US and elsewhere. This implies that any reduction in Chinese exports to the US would translate into a reduction in exports from Japan, South Korea, and others like them. Efforts to bypass the problem by shifting supply chains to India, Vietnam, and elsewhere might partly offset this effect, but such solutions are likely to be both costly and incomplete.
A major uncertainty looming over the global economy is who will be the next US president. While the US is home to only 5% of the world’s population and contributes just 15% of global value added, its role in shaping the world economy is unmatched. Given this, the trade policies of the next administration — whether led by US vice-president Kamala Harris or former president Donald Trump — will undoubtedly have significant spillover effects.
We know what Trump is likely to do: Raise US tariffs on imports from China to 60% and impose a 10% tariff on imports from all other countries. These policies would hurt Chinese exports to the US the most, but many other countries’ US exports would also decline, though a few — those providing substitutes for Chinese goods — might benefit.
