Geographies in Depth

3 unexpected consequences of the US-China trade war

A 100 yuan banknote (R) is placed next to a $100 banknote in this picture illustration taken in Beijing November 7, 2010. China must keep a firm grip on the yuan exchange rate in order to keep speculative capital at bay, a senior official at the country's foreign exchange regulator was quoted as saying by local media. Picture taken November 7, 2010. REUTERS/Petar Kujundzic (CHINA - Tags: BUSINESS)  FOR BEST QUALITY IMAGE SEE GF2E7981Q5601 - GM1E6BF19MU01

The stand-off began last year, when the US raised tariffs on washing machines and solar cell imports. Image: REUTERS/Petar Kujundzic

Emma Charlton
Senior Writer, Forum Agenda
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This article is part of: Annual Meeting of the New Champions

Almost 10,000 kilometres separate the winemakers in California’s Napa Valley and consumers in Beijing.

Even so, they’re both affected by the trade war between the two largest economies in the world. The stand-off began last year, when the US brought in tariffs on washing machines and solar cell imports. Since then, trade relations have been on something of a roller coaster, appearing to deteriorate in recent weeks, although discussions ahead of the G20 indicate that a resolution could be close.

While some of the implications of the dispute are obvious – US tariffs on imported steel and aluminium hit China, since it’s the world’s largest steel exporter – there are some unforeseen side-effects in today's hyper-connected economy.

Image: Statista

1. The trade war has given wine-makers a bitter taste

China’s wine importers and US exporters will be hit, according to Reuters. Additional tariffs on American wines mean there’s no wiggle room for importers, that story said.

US wine exports to China were $59 million in 2018, down 13% in volume and slumping almost 25% in value compared to 2017, according to the Wine Institute.

2. Chinese tourists are avoiding the United States

More than 10,000 kilometers away in China, the trade tensions also seem to be affecting how and where people are choosing to travel, which could dent the US tourism industry significantly, according to research firm, ForwardKeys.

The research from 2018 showed that the biggest impact was on bookings for group travel of six or more passengers from China to the US, which fell more than 30% in 2018 compared with 2017.

The trade war’s impact on Chinese tourism to the US. Image: ForwardKeys

“Our findings strongly suggest that President Trump’s trade war has had a significant impact on Chinese tourism to the US,” said ForwardKeys CEO and co-founder Olivier Jager. “It is unquestionable that the Chinese appetite for visiting the US is diminishing and that is bound to worry the US travel industry.”

3. The trade war could impact your mobile operating system

Tech giant Huawei Technologies confirmed it has built its own operating system in case the trade tensions interfere with its use of Google’s Android system.

While the company says it doesn’t want to shift away from Android and only plans to use its own operating system in “extenuating circumstances,” an escalation in the stand-off between China and the US could force its hand. And that could disrupt the role Apple and Google play in running operating systems worldwide.

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What is AMNC, the World Economic Forum's meeting in China?

How to move beyond the trade war to a constructive relationship between the global powers will be on the agenda at the World Economic Forum's Annual Meeting of the New Champions in Dalian, July 1-3.

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Geographies in DepthGlobal CooperationEconomic Growth
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