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 Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam