The US and China's tit-for-tat moves could wreak havoc on many economies in Asia.
According to an analytical report by Financial Times Confidential research, because of its export dependency, Vietnam will be impacted the hardest in Southeast Asia by the US-China trade war, Nikkei Asian Review reports.
Vietnam is currently the most export-dependent countries among the ASEAN big five, which includes Indonesia, the Philippines, Thailand and Malaysia.
The US has always been Vietnam's largest export market until last year when Vietnam's General Department of Customs announced that China has dethroned the US to be Vietnam's largest export market. Vietnam's annual exports to the US were valued at US$43.7 billion, which ranked first among the five ASEAN countries. The strengthening of US dollar also contributes to the economic threat the US-China trade war poses to the country.
The rest of ASEAN and Asia will not be immune to the impact of the tension between the two biggest world economies. The Philippines and Indonesia's current situation will also put the two countries under serious risk of having a currency crisis.
In June 2018, the Trump administration announced that it would slap a 25% tariffs on US$50 billion worth of goods from China, accusing the country of unfair trade practices. China responded saying it would fight back with retaliatory tariffs, declaring that the US has launched a trade war. The US responded by threatening to impose an additional 10% tariff on US$200 billion of Chinese imports.
Should the decision goes through, many Asian economies will suffer collateral damages.
"Asia is an export-dependent region, and for many economies [exports] are an engine for growth," said Stephen Schwartz, head of Asia-Pacific sovereign debt at ratings agency Fitch, to CNN Money. "No doubt about it, if this thing escalates, it would have a material impact on the region," he added.
[Photo via Creative Commons]
