Who Stands to Lose From Trade War With China?

There’s at least one big loser if President Donald J. Trump ignites a trade war with China: Taiwan. The island democracy has a heavily export-dependent economy enmeshed in billions of dollars in U.S. and China trade. Any blowup would have a spillover effect that would reverberate from Silicon Valley to Taipei and Beijing.

The risk of such a war is real. For months, the billionaire businessman-turned-politician has bashed China, accusing it of manipulating its currency and stealing American jobs. More worryingly, there were concerns President Trump would break decades of upholding the “One China Policy.” Fortunately, that issue blew over last week when Trump spoke with Chinese President Xi Jinping and pledged to honor that stance.

As tensions between the Trump administration and China ebb and flow, companies dependent on Taiwan are considering repositioning some operations in their global supply chains. One is Taiwanese tech giant Foxconn, a crucial Apple supplier that makes iPhones in mainland China and employs roughly 1 million of its citizens.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.