Gaidar Institute experts on the fallout of a trade war between China and the US

RBC has published the opinion of Alexander Firanchuk and Dmitry Kuznetsov of the Gaidar Institute’s International Trade Studies Department on what the escalation of the trade war between China and the United States will lead to.

Alexander Firanchuk noted that unlike previous stages, when China gave more of a symbolic response, the current situation indicates a full-scale confrontation. «Consequently, the world is plunging into a global trade war. The negative effect of such a war can reach and even exceed 1 p.p. of global growth, which will be spread among countries differently," the expert said.

He also noted that companies will look for ways to minimize payments, including redirecting shipments, changing the country of origin of goods and increasing domestic production. «China, in particular, has already shown a tendency to shift some production to Southeast Asian countries in anticipation of a pending trade war with the US and is likely to continue this practice. This may become a model for American companies seeking to minimize the impact of tariffs," the expert noted.

According to Dmitry Kuznetsov, while a slowdown in global economic growth is possible, it is unlikely that it will reach critical marks for a strong impact on global growth rates. «At the beginning of 2025, the IMF forecast global growth of 3.3%, so to «reach» the 2% mark, if the rest of the countries are unaffected, GDP growth in the US, China and the EU would need to decline by 2.6 p.p.," he calculated.

«Any adjustment processes take time. We have clearly and repeatedly seen this during the period of sanction pressure on Russia, when a new batch of sanctions could temporarily disorient foreign trade, but in a few months everything came to a new equilibrium," emphasized Dmitry Kuznetsov.

Assessing the impact of the trade war on Russia, Kuznetsov believes that the negative consequences associated with a reduction in demand for commodities will outweigh the positive ones. «The main negative consequence is a reduction in demand for commodities due to the slowdown in the global economy and the redirection of some commodities from the markets that have been shut off by tariffs," Kuznetsov explained.

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Friday, 04.04.2025